- The relentless flattening of the Treasury yield curve continues, could invert before the end of the year.
- Curve inversion is considered a sign of recession.
The treasury yield curve flattening continues, stoking fears the US economy is heading for recession
The spread between the 10-year treasury and the 2-year treasury yield fell to 30 basis points – the lowest level since August 2007 and bond market experts believe the curve could invert (10-yr yield would dip below 2-yr yield) by the end of the year.
The yield curve inversion is widely considered the most reliable recession indicator and could force the Fed to adopt a wait and watch approach.
Hence, the relentless flattening of the yield curve is USD-bearish.
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