US Treasury Yield Curve Nears Inversion as Fed Rate Hikes Stoke Recession Fears

Bloomberg··US·Read original
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Summary · why it matters

The yield gap between 10-year and 2-year US Treasuries briefly narrowed to 17 basis points last week, its lowest level since early 2025. As the yield curve continues to flatten, the likelihood is growing that the 10-year yield will soon fall below shorter-term yields, producing an inversion. An inverted curve has long been regarded as a strong leading indicator of recession. The Fed raised rates this month for the first time in three years and signaled the possibility of further hikes, with the market pricing in at least three quarter-point increases over the next year. Zack Griffiths of research firm CreditSights noted that an inverted or sharply flattened curve raises questions about views on the strength of the economy. Jenadi Goldberg of TD Securities, meanwhile, said that because substantial rate hikes are already priced in, the 2-year to 10-year curve is likely to steepen in the coming weeks.

Impact on assets 4

Financials▲ · 1 stocks
Others▲ · 3 stocks
％US Government Bond 2Y
US-2Y
▲ PositiveMonetaryrelevance

2-year yield is elevated relative to the 10-year as Fed hikes are priced in, keeping the short end high.

Off-coverage companies 1

CreditSightsPrivate± Mixed
relevance

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