In the equity market, stocks continue to reach new highs despite occasional setbacks. However, the bond market is signaling a different story.
This week, the yield on short-term Treasury debt rose more quickly than that on long-term Treasury debt. By May 24 close, two-year Treasury notes were yielding 47.9 basis points more than 10-year Treasury notes, up from a 45.9 basis point difference on the day before. This marks the most significant gap this year.
The inversion of the yield curve, a phenomenon where short-term yields surpass long-term ones, is not just a typical sign of tougher economic times ahead. It is a historical one. The current inversion is the longest in U.S. history, with no signs of abating.
The lack of interest cuts shifted the tide for the U.S. Treasuries
Actions undertaken by the Federal Reserve have affected short-term yields,…
