- US yield curve is now steepest since the end of November.
- Steepening of the yield curve indicates fading recession fears.
The spread between the US 10-year and two-year Treasury yields jumped to a five-month high this Tuesday morning in Asia, signaling fading recession fears.
The differential rose to 24 basis points, the highest level since Nov. 29, earlier today and was last seen at 23 basis points, having risen by two basis points yesterday
Put simply, the treasury yield curve is now steepest since the end of November.
The spread had dropped to eight basis points in early December, triggering fears of curve inversion – a recession indicator – and was seen at 12 basis points ago.
The rise to five month highs indicates the recession fears have ebbed. That said, the US first quarter GDP report released on Friday showed the consumer spending, the main engine of the US economy, slowed, despite the sustained labor market strength.
The data released on Monday, however, showed that the US consumer spending increased by the most in more than 9-1/2 years in March.
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