The U.S. government bond market is sending a fresh batch of signals that investors are increasingly convinced the Federal Reserve’s aggressive actions to tame inflation will result in recession
The shape of the yield curve, which plots the return on all Treasury securities, is seen as an indicator of the future state of health of the economy, as inversions of the curve have been a reliable sign of looming recession.
A steepening curve typically reflects expectations of stronger economic activity, higher inflation and interest rates. A flattening curve can signal expectations of rate hikes in the near term and a weaker economic outlook. On Wednesday the Fed raised its benchmark overnight interest rate by 0.75% to a range of between 2.25% and 2.50% as it flagged weakening economic data. Powell said on Wednesday that achieving a soft landing for the economy was challenging.The part of the U.S. Treasury yield curve that compares yields on two-year Treasuries with yields on 10-year government bonds has been inverted for most of the past month and is around the most negative its been since 2000 on a closing price basis.
Some analysts pointed to another measure, the differential between what money markets expect the three-month federal funds rate to be in 18 months and the current three-month federal funds rate. That went briefly into negative territory on Tuesday, said George Goncalves, head of U.S. Macro Strategy at MUFG.
Another measurement of the curve, the 2-year forward rate for 3-month bills, is around the flattest since June 2021. Another part of the curve that compares the yield on three-month Treasury bills and 10-year notes has flattened dramatically over the past few weeks, from nearly 220 basis points in May to around 15 basis points this week although it steepened after Powell’s remarks.
Canada Latest News, Canada Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
'The outlook has darkened significantly:' IMF warns world economy could be on cusp of recessionThe International Monetary Fund cuts its global growth outlook for this year and next
Read more »
'The outlook has darkened significantly:' IMF warns world economy could be on cusp of recessionThe International Monetary Fund cuts its global growth outlook for this year and next
Read more »
'The outlook has darkened significantly:' IMF warns world economy could be on cusp of recessionThe International Monetary Fund cuts its global growth outlook for this year and next
Read more »
'The outlook has darkened significantly:' IMF warns world economy could be on cusp of recession'The outlook has darkened significantly:' IMF warns world economy could be on cusp of recession Economy
Read more »
Gold prices remain under pressure as U.S. consumer confidence falls to 95.7(Kitco News) - Gold prices are struggling to push into positive territory as pessimism grows among U.S. consumers, further raising fears of a potential recession.
Read more »
U.S. stock trading hits 2022 low before Fed, earnings - BNN BloombergU.S. stocks wavered in a choppy session as traders braced for earnings from technology bellwethers amid the threats of a hawkish Federal Reserve, scorching inflation and a looming economic recession.
Read more »