One of Wall Street's most ominous — and accurate — recession indicators has been flashing red for so long that some say it has lost its relevance.

The inverted yield curve — which occurs when the yields on long-term Treasuries fall below short-term yields — is a time-honored recession signal. Normally, long-term yields should exceed short-term ones.

Yields on the 10-year Treasury note, often used as a benchmark for 30-year fixed-rate mortgages, have fallen below yields on six-month Treasury bills for eight straight months with no recession, the longest such period since 1981, says Joseph Kalish of Ned Davis Research. The curve has been inverted 11 of the past 13 months.

Every recession since 1960 has been preceded by an inverted yield curve. The indicator's only wrong signal was in 1966, when the curve inverted but no recession followed.

The indicator carries logic behind it. The Federal Reserve pushes up rates to slow the economy, and bond traders push yields down if they smell a slowdown.

"The bond market is telling you they have a pessimistic view of the next 12 months," says Russ Koesterich of Barclays Global Investors.

But Koesterich thinks demand for long-term bonds, especially from China and oil-producing nations, has twisted the curve. As demand rises, yields fall.

Oil exporters held $97.1 billion in Treasuries at the end of November, up from $79.3 billion a year earlier. China's Treasury holdings have swelled to $347 billion, up from $303.9 billion a year before.

In other ways, too, globalization may be diminishing the yield curve's accuracy as a recessionary signal. On one hand, increases in the fed funds rate, the interbank overnight loan rate, can slow the economy. Banks must pay more for deposits. Consumers pay more for loans.

On the other hand, U.S. companies can now often borrow overseas at lower rates. The funds rate, for instance, is 5.25 percent; the European Central Bank rate is 3.5 percent.

"Our own yield curve is less important when companies can borrow elsewhere," Kalish says.

The 30-year bond is typically 1.5 percentage points higher than the fed funds rate. The 30-year bond yield was 4.89 percent Monday — 0.36 below the fed funds rate.

What would happen if the 30-year bond yield rose to 6.5 percent? "There would be a lot of wailing and gnashing of teeth," Koesterich says. "It would be biblical."