The S&P 500 fell into a bear market last year as economic uncertainty rippled through Wall Street. When inflation reached a 40-year high, the Federal Reserve began raising interest rates. But the central bank was more aggressive with its monetary policy than many investors anticipated. Fed policymakers raised interest rates at their fastest pace since the early 1980s, and many experts worried that the rapid tightening will tip the U.S. economy into a recession.

Two economic indicators, in particular, are sounding very loud recession alarms. Here's what investors should know.

The first economic indicator sounding the recession alarm is the Treasury yield curve. Under normal conditions, long-term bonds pay higher interest rates than short-term bonds. This is because investors who buy long-term want to be compensated for the opportunity cost of their money. Anyone who locks capital in a bond for several years feels they deserve a higher interest rate than someone who locks capital in a bond for a few months. If you plotted the bond rates on a chart from short-term to long-term and connected the dots, they would form a line starting low on the left and rising as it moved to the right. This visual presentation is what is meant by the yield curve.

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Source Fool.com