When the Yield Curve Screams You Need to Listen
Today, and the past few days in general, has been unlike anything we have seen in the treasury market since the GFC. The entire duration of the curve between the 6 month bill and the 7 year note (circled below in red) have now inverted the 10 year note (circled below in green).
I do not know which is more impressive, the 52 week bill being 28 basis points above the 10 year note or the simple fact that the same 52 week bill inverted the 30 year bond (circled above in yellow).
Without going into too much detail on what a yield curve is, I have covered this previously, something in the economy is badly broken (namely problems with supply and demand). The spread between the 10 and 2 year note, the most watched part of the curve within the financial community, is now at a staggering -28 basis points. This particular benchmark has preceded that last 6 recessions (below) without a miss. Will this time be different?
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