As stocks soar back towards record highs shrugging off every fear as if it was 2017 all over again, the Treasury market is starting to scream ‘trouble ahead’…
Since The Fed hiked rates in March, the yield curve has collapsed…
2s30s is below 60bps for the first time since Oct 2007…
2s10s is at 41bps intraday!!
5s30s is testing 30bps…
And 10s30s is back to just 17bps…
Even The Fed’s Williams warned yesterday that he would view “yield curve inversion as warning signal” noting that a “inverted curve was a powerful recession signal” and added that “if the yield curve inverted, her would take it seriously.”
Perhaps that’s why stocks are up… in the irrational mind of today’s central-banker-inspired investors, the closer we get to inverted, the closer The Fed is to ending its tightening cycle and hey presto… more QE, stocks go up!!??!!
“probably nothing…”
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Bonus Chart: US Treasury 2Y Yields have never been this wide relative to German 2Y Bund Yields… ever…
