2-year/10-year U.S. Treasury yield curve inversion deepens, flashing 'red'

[Zorro]

Source: Marketwatch

The yield gap between the U.S. 2-year and 1-year Treasury note inverted further on Tuesday as bond market participants grew increasingly worried about the economic outlook in the face of President Trump’s international trade policies.

What are Treasurys doing? The 10-year Treasury note yield slipped 6 basis points to 1.484%. The 2-year note rate was down 2.3 basis points to 1.528%, while the 30-year bond yield slumped 7.7 basis points to 1.963%.

The spread between the 2-year note and the 10-year note stood at negative 4 basis points, Tradeweb data show.

The yield curve’s slope is usually positive as investors demand more compensation to own long-term debt against inflationary pressures or monetary policy uncertainty. An inversion of the yield curve, or a negative yield spread, thus points to widening concerns about the health of the economy and is seen as a usually reliable indicator of a coming recession.

Read more: https://www.marketwatch.com/story/treasury-yields-retreat-ahead-of-key-debt-auction-2019-08-27

[Wellstone ruled]

1. Noticed at Midnight

the Yield Curves were crossing over each other in real time on Bloomberg Eourpe. Notice the Alog's were cut off at 9 + Pacific Time today. And then,ka-boom,watch out below.

[Control-Z]

2. Yay, maggot!!

[bucolic_frolic]

3. Everything is in meltdown, worst since September 2008

[empedocles]

4. Useful to note that yield prices follow underlying supply and demand

The marketwatch story noted negative yields in German and Japanese bonds, that's where the lender pays the borrower to borrow - not a common or healthy sign.

I did not notice the word 'deflationary' in the story. Hmmmm.

[bucolic_frolic]

5. Deflationary - that figures

now that they've stolen all the loot through tax cuts, time to bankrupt everyone so they can buy everything on the cheap

Seriously. This is the biggest looting since Lincoln gave the railroads free reign

[Javaman]

6. crap. :( nt

[OneCrazyDiamond]

7. Perfect

for the Recession/Impeachment/Election of 2020.

[klook]

8. Sometimes it takes longer to manifest as a recession.

For example, after the yield curve inverted in Feb. 2006, it was Dec. 2007 before the recession began. So this could end up being a flaming bag of dog poop on the incoming Democratic president's White House doorstep some time in early 2021.

Forbes published a handy chart in March 2019 showing different recessions and their yield curve antecedents. Note that several other times, it was about a year between yield curve inversion and the onset of a recession, so it's an inexact science, that's for sure.

One thing I read today is that the government has been buying a lot of Treasury bonds, artificially tightening supply and thereby decreasing the long-term interest rates they pay out. So it's hard to tell if this is really the usual indicator of investor confidence.

However, as this DU thread notes, more and more investors are dumping stocks. So that's another signal that rough times could be ahead.

I confess, I have mixed feelings about it. A stock market downturn will cause a lot of suffering, when that translates to layoffs, retirement fund shrinkage, and other economic problems. However, it could be what it takes to get rid of the Mar-a-Lago Menace, so it may be worth the suffering.

[OneCrazyDiamond]

9. the faster he exits

the sooner the turnaround.

[eggplant]

10. So much winning.