BREAKING: The yield curve, a reliable recession indicator, briefly inverts again with 2-year Treasury yield topping 10-year rate

[tacobell fan]

The spread between the yield on the 10-year Treasury note and that of the 2-year note on Wednesday turned negative for the second time in one week, a recession warning that flashed for the first time since 2005 on Aug. 14. 

The inverted bond-market spread is seen by many veteran traders as an important recession omen, though the timing the eventual downturn is less predictable. At around 3:53 p.m. ET, the yield on the benchmark 10-year Treasury note was higher at 1.579%, while the yield on the 2-year Treasury note rose to 1.573% after briefly entering negative territory.

 

Fears of an economic slowdown appeared to resurface Wednesday afternoon, when the release of the Federal Reserve’s July meeting minutes reiterated officials’ belief that its July rate cut as just a “mid-cycle adjustment.”

Central bank officials who voted to lower interest rates late last month agreed that the move shouldn’t be interpreted as a predecessor to more rate cuts or a “pre-set course” for the overnight lending costs.

Economists consider the spread between the 10-year and the 2-year of great importance because inversions of that part of the curve have preceded every recession over the past 50 years. The last five 2-10 inversions have eventually led to recessions. Bond yields move inversely to their prices.

“In their discussion of the outlook for monetary policy beyond this meeting, participants generally favored an approach in which policy would be guided by incoming information and its implications for the economic outlook and that avoided any appearance of following a pre-set course,” the minutes stated.

The minutes were “very consistent with Powell’s post-meeting press conference,” Ian Lyngen, head of U.S. rate strategy at BMO Capital Markets, wrote in an emailed statement. “Since the release the flattening has extended -- but not so much as to trigger an implied deeper ‘policy error’ response.”

 

Still, investors widely expect the Fed to cut interest rates again before the end of the year after voting to reduce the overnight lending rate by 25 basis points in July. Federal funds futures following the release of the minutes implied traders see a 98% chance of a 25-basis-point cut at the central bank’s Sept. 17–18 policy meeting.

At that time, the Fed’s policymaking committee cited “implications of global developments for the economic outlook as well as muted inflation pressures.” The committee called the current state of growth “moderate” and the labor market “strong,” but decided to loosen policy anyway.

But Chairman Jerome Powell both confused and spooked markets during the subsequent press conference by categorizing the central bank’s cut — the first of its kind since 2008 — as a “midcycle adjustment,” dashing hopes that additional cuts are guaranteed.

Almost half of the Fed’s 12 reserve bank presidents said they weren’t confident about cutting rates ahead of the July meeting despite worsening global economic growth forecasts and several tepid inflation metrics.

Traders are also likely to closely monitor the Fed’s annual Jackson Hole seminar later this week and a Group of Seven (G-7) summit at the weekend for clues on what additional steps policymakers will take to boost economic growth.

 

U.S. MARKETS OVERVIEW: TREASURYS CHART

TICKER	COMPANY	YIELD	CHANGE	%CHANGE
US 3-MO	U.S. 3 Month Treasury	1.977	0.026	0.00
US 1-YR	U.S. 1 Year Treasury	1.779	0.044	0.00
US 2-YR	U.S. 2 Year Treasury	1.575	0.061	0.00
US 5-YR	U.S. 5 Year Treasury	1.473	0.042	0.00
US 10-YR	U.S. 10 Year Treasury	1.588	0.029	0.00
US 30-YR	U.S. 30 Year Treasury	2.072	0.029	0.00

[JANASENA]

antey recession coming ane ga deeni ardham. 

[user789]

2 minutes ago, JANASENA said:

antey recession coming ane ga deeni ardham. 

yes...when is it anedhi big q

[LazyRohit]

maku nammakam ledu dora gif veyyadni vaa

[tacobell fan]

3 minutes ago, JANASENA said:

antey recession coming ane ga deeni ardham. 

it's too early to say, it's just a dip, even if it does we are looking at least an year to 18 months.

[reality]

[JANASENA]

1 minute ago, user789 said:

yes...when is it anedhi big q

bhale timing babai naadi, next monday joining, next year recession. Looks like I have to work very hard (since its a new tech)

[argadorn]

6 minutes ago, JANASENA said:

bhale timing babai naadi, next monday joining, next year recession. Looks like I have to work very hard (since its a new tech)

uncle appudepudo poyi eppudu vachindha job ... 

[tacobell fan]

1 minute ago, argadorn said:

uncle appudepudo poyi eppudu vachindha job ... 

Job leni vallu ante India lo ne kadu America lo kuda chinna chupe na uncle

[argadorn]

1 minute ago, tacobell fan said:

Job leni vallu ante India lo ne kadu America lo kuda chinna chupe na uncle

ledhu uncle .....  experience guys ki job market ela undha ani bayam antay uncle ... dont think negatively .... sarcastic ga analedhu 

[Hydrockers]

Ivanni maku enduku

Recission eppudu vastado cheppu

[tacobell fan]

1 minute ago, Hydrockers said:

Ivanni maku enduku

Rescission eppudu vastado cheppu

Rescission is a hoax antunna @kevinUsa