Bonds flash recession warning light as key part of the yield curve inverts again

7/5/2022 11:51:00 PM
Bonds flash recession warning light as key part of the yield curve inverts again

The bond market is flashing a warning that the economy may be falling or already has fallen into recession, according to one closely watched measure.

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The bond market is flashing a warning that the economy may be falling or already has fallen into recession, according to one closely watched measure. DelanoSaporu explains why the inverted yield curve could be a warning sign that the economy is weakening.

The bond market is flashing a warning that the economy may be falling or already has fallen into recession, according to one closely watched measure.

But the 2-year yield has now risen above the 10-year yield.As of midday Tuesday, the 2-year Treasury yield was at 2.792%, above the 2.789% rate of the 10-year. You can monitor this key spread in real timehere.That so-called inversion is a warning sign that the economy could be weakening and a recession is possible.

"There's something afoot in investor sentiment that is difficult to ignore, given the inversion is occurring with 10-year yields below 3%," said Ian Lyngen, head of U.S. rates strategy at BMO. "I wouldn't say it's a direct indication that a recession is a near-term risk. Rather it's consistent with increased concern about recession."

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Bonds flash recession warning as key part of yield curve inverts again

Bonds flash recession warning as key part of yield curve inverts againThe bond market is flashing a warning that the economy may be falling or already has fallen into recession, according to one closely watched measure. If GDP growth isn't outpacing inflation, we're in a recession, even without negative growth. So yeah, we're in a recession, but most likely it will not be another 'Great Recession' and will abate when inflation recedes. Has not? 😒 Lol....now it's 'we may already be in a recession or it's possibly going to start soon' vs last week..'the US is in recession...'

Bonds flash recession warning as key part of yield curve inverts again

Bonds flash recession warning as key part of yield curve inverts againThe bond market is flashing a warning that the economy may be falling or already has fallen into recession, according to one closely watched measure. If GDP growth isn't outpacing inflation, we're in a recession, even without negative growth. So yeah, we're in a recession, but most likely it will not be another 'Great Recession' and will abate when inflation recedes. Has not? 😒 Lol....now it's 'we may already be in a recession or it's possibly going to start soon' vs last week..'the US is in recession...'

Treasury yield curve flattens on U.S. growth fearsThe U.S. yield curve flattened Tuesday as investors mulled how far the Federal Reserve will hike interest rates as the U.S. economy slows.

Treasury Yields Fall as Recession Fears Continue to Dampen Risk Sentiment

Treasury Yields Fall as Recession Fears Continue to Dampen Risk SentimentU.S. Treasury yields retreated on Tuesday as concerns about a potential economic recession continued to send investors in search of safety. Free borrowing is over for company's, time to lay off workers cut benefits do stock buybacks get a government bailout

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2-year yield.“There’s something afoot in investor sentiment that is difficult to ignore, given the inversion is occurring with 10-year yields below 3%,” said Ian Lyngen, head of U.“There’s something afoot in investor sentiment that is difficult to ignore, given the inversion is occurring with 10-year yields below 3%,” said Ian Lyngen, head of U.What’s happeningWhat’s driving markets The U.

But the 2-year yield has now risen above the 10-year yield. As of midday Tuesday, the 2-year Treasury yield was at 2. rates strategy at BMO.792%, above the 2. “I wouldn’t say it’s a direct indication that a recession is a near-term risk.789% rate of the 10-year. Rather it’s consistent with increased concern about recession. You can monitor this key spread in real time here ..

That so-called inversion is a warning sign that the economy could be weakening and a recession is possible. The yield curve measures the spread between a bank’s cost of money versus what it will make by lending it out or investing it over a longer period of time. The yield curve measures the spread between a bank’s cost of money versus what it will make by lending it out or investing it over a longer period of time. "There's something afoot in investor sentiment that is difficult to ignore, given the inversion is occurring with 10-year yields below 3%," said Ian Lyngen, head of U.S. After a burst higher to nearly 3. rates strategy at BMO.5% in mid-June, the 10-year yield has slumped to 2. "I wouldn't say it's a direct indication that a recession is a near-term risk.78%, and was hovering just below the 2-year note’s 2. The result is a flattening yield curve, with 2-year yields of 2.

Rather it's consistent with increased concern about recession." One way to look at the importance of the yield curve is to think about what it means for a bank. The 10-year had moved higher on worries about inflation, but reversed course as investors became more worried about the economy. The 10-year had moved higher on worries about inflation, but reversed course as investors became more worried about the economy. The yield curve measures the spread between a bank's cost of money versus what it will make by lending it out or investing it over a longer period of time. If banks can't make money, lending slows and so does economic activity. The benchmark 10-year is widely watched because it influences mortgages and other lending rates. After a burst higher to nearly 3. The 2-year is much more influenced by the Federal Reserve’s interest rate hikes, and it has been moving higher. See the economic calendar.

5% in mid-June, the 10-year yield has slumped to 2. “I don’t know in and of itself that it’s a recession indicator,” said Gregory Faranello, head of U.78%, and was hovering just below the 2-year note's 2.79% yield. rates at AmeriVet Securities. rates at AmeriVet Securities. The 10-year had moved higher on worries about inflation, but reversed course as investors became more worried about the economy. Yields move opposite bond prices. My view is it’s still inflation over growth.

The benchmark 10-year is widely watched because it influences mortgages and other lending rates.” The 2-year to 10-year curve first inverted March 31, then again briefly in June. The 2-year is much more influenced by the Federal Reserve's interest rate hikes, and it has been moving higher. Faranello also pointed out that the curve was inverted in 2019, warning of a recession. "I don't know in and of itself that it's a recession indicator," said Gregory Faranello, head of U.S. To be sure, some investors and economists typically want to see the inversion last for a significant period of time before believing it is forecasting a recession. To be sure, some investors and economists typically want to see the inversion last for a significant period of time before believing it is forecasting a recession. rates at AmeriVet Securities.

"There's a battle going on between inflation and growth for the Fed. Economic data has weakened, and Federal Reserve Chairman Jerome Powell has indicated the central bank would be steadfast in its fight with inflation. My view is it's still inflation over growth. Investors have become more concerned the Fed will raise interest rates so much that it slows the economy to the point where it tips into recession." The 2-year to 10-year curve first inverted March 31, then again briefly in June. While the market has become fearful, many Wall Street economists do not expect a recession this year though some are predicting the economy could enter a period of contraction next year. Faranello also pointed out that the curve was inverted in 2019, warning of a recession. But because the Federal Reserve was cutting interest rates at the time, he said a recession may not have occurred in 2020, were it not for the pandemic. “His answer was: ‘We’re not worried about that right now. “His answer was: ‘We’re not worried about that right now.

To be sure, some investors and economists typically want to see the inversion last for a significant period of time before believing it is forecasting a recession. Loading chart.’ It’s definitely inflation over growth, and the Fed is not worried about an inverted yield curve,” said Faranello.. Besides watching weaker data, investors are focused on the.. In the past several weeks, the market has become more spooked by the potential for a recession.

Economic data has weakened, and Federal Reserve Chairman Jerome Powell has indicated the central bank would be steadfast in its fight with inflation. Investors have become more concerned the Fed will raise interest rates so much that it slows the economy to the point where it tips into recession. While the market has become fearful, many Wall Street economists do not expect a recession this year though some are predicting the economy could enter a period of contraction next year. Faranello said Powell was recently asked about the potential for a yield curve inversion. "His answer was: 'We're not worried about that right now.

We're worried about bringing inflation down to 2%.' It's definitely inflation over growth, and the Fed is not worried about an inverted yield curve," said Faranello. Besides watching weaker data, investors are focused on the .