The yield curve is flatter than it has ever been since before the financial crisis.

If it gets any worse, there'll be lots of talk of a possible recession, says Craig Johnson, chief market technician at Piper Jaffray. He told CNBC's "Trading Nation" on Friday why this could be a warning sign for markets.

The spread between the 2-year and 10-year bond yields is hovering above minor support at 43 basis points. That's its lowest levels since 2007.

Yield curve talk, and worries over a curve inversion, will crop up in market headlines more frequently as we approach the June Federal Open Market Committee meeting. The decision-making committee's next meeting is June 12-13.

A 25-basis-point hike in June, a near certainty among market participants, would leave the spread between the 2-year and 10-year yield at less than 25 basis points.

If the yield curve flattens, or even inverts, expect to see additional selling pressure on the financial sector. The banks, regional banks especially, will be laggards of the sector.

Bottom line: More Fed rate hikes will flatten the yield curve even more, putting strain on financials stocks.