This chart is sending a scary message

Published Tue, Jan 26 201611:05 AM EST

Patti Domm @in/patti-domm-9224884/@pattidomm

This week, the yield curve reached its flattest level since the financial crisis. When some market pros look at it, they see the Fed at work — with promises of more rate hikes to come. But to others, the flattening yield curve is signaling the potential for something much more ominous — a significant weakening of the economy or a recession. Below is how various experts view this phenomenon and what it could mean for your money. In this case, the "flattening" is the narrowing gap between the spread of the 10-year Treasury yield and the two-year. It touched just under 114 basis points on Monday, the flattest since the start of 2008. "I think this is a way to determine what the bond market thinks of the economy here," said Asbury Research's chief strategist, John Kosar. He called attention to the flattening in a note last week, and he warned at 121, it was at a major inflection point. Read More Mohamed El-Erian warns of day of reckoning Kosar said it could be signaling a deeper stock market decline, if it does prove to be the result of a weakening economy. The spread was around 117 basis points Tuesday. The curve flattened to a similar degree last February but then it widened out to its steepest level of the year in July before flattening again. Kosar said the curve began to flatten last summer when worries about China took hold. "That indicates to me an apprehensive bond market," he said. "One has to be a little careful. A flatter yield curve can come in different versions. A bull flattening, which is happening, or a bear flattening, which is when yields are rising because the Fed is hiking," said David Ader, head of Treasury strategy at CRT Capital. "Typically, it's the flattening that presages a recession — a bear flattening — because you have yields high enough at the front end that you can get to an inverted curve." Read More Gundlach: 'What the heck is the Fed doing?' After years of Fed easing, and now tightening, the market is in an unusual position for such a flat curve. "We've never seen yields at this level in a true weakening environment," said Ader. "It doesn't have all the hallmarks the markets would need, but yet it looks ominous." The two-year yield Tuesday was at 0.84 percent, and the 10-year was at 2.00 percent. Ward McCarthy, chief financial economist at Jefferies, said he's not buying the idea that the curve flattening is a recession warning. "I think it's actually telling three things — concern about global financial instability, a higher risk premium, as far as the growth outlook is concerned, which I think encompasses a slower trajectory for the fed funds rate ... and a downshift in inflation expectations. Of all the factors, I think the least significant is growth," he said. Ader also said the concerns about inflation are coming to the fore. "It says the Fed's inflation forecasts are wrong." McCarthy said the central bank is driven not only by growth but by inflation. "The Fed has in terms of the dual mandate, maximum employment. There's been a lot of progress on that front. As far as getting to its stable 2 percent inflation, there's been no progress on that front," McCarthy said. He also noted that the curve was flattening when both the 10-year and two-year yield were higher. As for CNBC's Rick Santelli, he offers a safety tip: "I would be wary of any yield curve interpretation considering how many trillions of dollars of long-end securities the Federal Reserve has taken out of the marketplace and is holding on its balance sheet."

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This week, the yield curve reached its flattest level since the financial crisis.

When some market pros look at it, they see the Fed at work — with promises of more rate hikes to come.

But to others, the flattening yield curve is signaling the potential for something much more ominous — a significant weakening of the economy or a recession.

Below is how various experts view this phenomenon and what it could mean for your money.