The U.S. Treasury yield curve is beginning to de-invert, calling for caution on the part of traders of risky assets, including bitcoin. godbole17 reports
a similar opinion as early as August last year, saying,"when the curve steepens, recessions happen and stocks fall."The chart compares the spread between the 10- and two-year yields with Nasdaq going back 1980s. The vertically shaded area represents economic recessions.
The curve has always normalized or re-steepened into recessions, bringing pain to Nasdaq, Wall Street's tech-heavy equity index. If history is a guide, tech stocks could come under pressure, dragging bitcoin lower if the ongoing de-inversion of the yield curve gathers steam.The yield curve is a graphical representation of the relationship between interest rates and the maturities of U.S. Treasury fixed-income securities. Bond yields and prices move in the opposite direction. The curve usually is steep because investors demand higher compensation for lending money for longer durations.
Analysts closely track spreads between long and short-duration yields to gauge the economic direction. Yields on longer-duration bonds or at long ends mainly represent expectations for economic growth, while those at the short end are more reflective of interest rate expectations.over the past 12 months, leading to a sharp rise in the two-year yield relative to the 10-year yield. The latter lags as growth expectations slide due to monetary policy tightening.
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