Amid market turbulence, short and long-term Treasury yields invert for the first time since early April
On Monday, two-year and 10-year US Treasury yields briefly inverted for the first time since early April. The 10-year rates also reached their highest point since 2011.
The yield curve between these two rates is monitored closely by traders. When short-term interest rates exceed long-term rates, that is considered by many to be a key indicator of a recession.
The spike occurred after data released on Friday showed higher-than-expected inflation rates and triggered concerns about an aggressive rate hiking strategy by the Federal Reserve.
The Fed will conclude a highly anticipated meeting on Wednesday, where it is expected to announce a 50-basis-point rate hike. Some traders are now predicting an increase of 75-basis-points.
Rates have already been raised twice this year, including a 50-basis-point increase in May meant to combat rising inflation.
With extreme turbulence in crypto and US equities markets, traders are increasingly concerned about a coming economic downturn, with some wary about the onset of a recession.
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Author: Sam Venis
