Free Republic

It has been over three years since the disastrous Covid economic shutdowns of 2020. And here we are again! US investment-grade bond yields have just had the biggest two-day drop since April 2020. And the US Treasury 10Y-2Y curve remains steeply inverted. Help me Jerome!

We know that the horribly-flawed Bidenomics doesn’t work, unless you are a large corporate donor in green energy. For the rest, particulary small companies, Bidenomics is a total bust. Under Bidenomics (the Soviet-style command economy), small companies are paying reconrd interest expense WITHOUT a major boost from interest income. Well, ain’t that a kick in the head … to most companies. Pension funds that invested in “safe” MBS are finding that MBS isn’t so safe under inflation. Look at the 10Y-2Y yield curve since Covid. I had a slight surge by March 2021, then has flattened then inverted as The...

A widely watched section of the U.S. Treasury yield curve hit its deepest inversion on Monday since the high inflation era of Fed Chairman Paul Volcker, reflecting financial markets' concerns that an extended Federal Reserve rate hiking cycle will tip the United States into recession. The closely-watched spread between the 2-year and 10-year U.S. Treasury note yields hit the widest since 1981 at -109.50 in early trade, a deeper inversion than in March during the U.S. regional banking crisis. The gap was last at -108.30 bp. Signs of strength in the U.S. economy have prompted market participants to price in...

The US economy has a case of the summertime blues. Bull steepenings in the yield curve are generally seen as a precursor to a recession, but they are often preceded by bear steepenings. The 3m30y curve is currently bear steepening, indicating a recession could begin as early as the summer. In fact, the 3m30y curve is now inverted at -94.628 basis points pointing to a recession in summer 2023.

Whoop there it is! The US Treasury 10y-2y yield curve descended further into inversion at -82 basis point, the worst since 1981. This is not a good sign, since the 10Y-2Y curve typically inverts just prior to a recession. The current US Treasury curve is currently humped at 1 year, then declining rapidly. The swaps curve is peaking at 9 months, then declining rapidly. The Fed Funds Futures market is pointing to a peak Fed Funds rate of 5% at the May 3rd FOMC meeting. Yes, a recession is headed our way.

US 30-year mortgage rates are above 7% as The Federal Reserve slowly withdraws its Covid-related monetary stimulus and attempt to combat near 40-year highs in inflation under Biden (aka, Bidenflation). However, the US Treasury 10-year yield is down -12 basis points this morning. And we have an important predictor of recession, the Treasury 10yr-3mo yield curve. And if the Republicans win The House (and maybe the Senate) at the midterms, Biden can blame Republicans for the recession. Joe Biden, Hunter and Biden’s brother James must be singing “Damn, it feels good to be a Biden!“

US Treasuries Yield Curve. An app for exploring historical interest rates.

(Reuters) - Benchmark 10-year Treasury yields hit their highest level since 2011 on Monday, and a key part of the yield curve inverted for the first time since April as investors braced for the prospect that the Federal Reserve’s attempts to stem soaring inflation will dent the economy.Yields jumped after data on Friday showed that U.S. consumer prices accelerated in May as gasoline prices hit a record high and the cost of food soared, leading to the largest annual increase in nearly 40-1/2 years.The Fed is expected to hike rates by 50 basis points when it concludes its two-day meeting...

March 31 (Reuters) - A key part of the yield curve inverted on Thursday, according to Tradeweb data, as the two-year U.S. Treasury note yield rose above the benchmark 10-year U.S. Treasury note yield. That part of the yield curve inverted on Tuesday for the first time since September 2019. An inversion of the two-year, 10-year part of the curve is viewed by many as a signal a recession is likely to follow in one to two years.

Alarm! There is a massive divergence between the collapsing US Treasury 10Y-2Y yield curve and the near-term forward spread. The near-term forward spread is the difference between the implied interest rate expected on a three-month Treasury bill six quarters ahead and the current yield on a three-month Treasury bill. As we already know, the 10Y-5Y yield curve has inverted signaling a coming recession. This divergence between the Treasury yield curves and the near-term forward spread is occurring as US inflation hits the highest rate in 40 years. Now President Biden is considering “Releasing the Kraken!” That is, releasing a huge...

NEW YORK, (Reuters) - A closely monitored section of the U.S. Treasury yield curve inverted on Tuesday for the first time since September 2019, a reflection of market concerns that the Federal Reserve could tip the economy into recession as it battles soaring inflation. For a brief moment, the yield on the two-year Treasury note was higher than that of the benchmark 10-year note . That part of the curve is viewed by many as a reliable signal that a recession could come in the next year or two. The 2-year, 10-year spread briefly fell as low as minus 0.03...

The US Treasury 10Y-5Y curve (aka, the belly of the Treasury beast) has inverted. It is more about the 10Y Treasury yield rising more slowly than the 5Y yield. Freddie Mac’s 30Y mortgage commitment rate rose to 4.42%. Today’s initial jobless claims came in at 187k, the lowest in modern history!! Overheated much? More fuel on The Fed Fire to raise rates above 0.50%. Fixed-income trading floors:

Oil prices are soaring as US President Biden pleads like a homeless person to foreign countries for oil rather than let the US produce more oil to drive down prices. Meanwhile, the US Treasury yield curve 10Y-3M is at its steepest (rising 10Y yields while The Fed keeps short rates at near zero). But if we look at the belly of the beast, so to speak, the 10Y-5Y slope, we can see that the Treasury curve has declined to a mere 0.278 basis points as inflation rages. Bankrate’s 30-year mortgage rate keeps on climbing and has hit 4.55% as the...

The US Treasury yield curve (10Y-2Y) is rapidly approaching inversion at 20.5 bps (where the 10-year yield is lower than the 2-year yield). But the 10Y-3M curve is generally steepening at 173.33 bps. Of course, the driving force behind the flattening of the 10Y-2Y curve is the rapidly rising 2-year Treasury yield (orange line). The last time the 10Y-2Y curve inverted was in 2019, prior to the COVID outbreak in early 2020. The Wu Xia United States Federal Reserve Funds Shadow Rate has finally climbed back into positive territory. At last look, The Federal Reserve is forecast to raise their...

If the U.S. yield curve inverts in 2022, it may signal that a recession is coming and that can mean poor returns for stocks. Currently, the U.S. yield curve still has an upward slope to it, but it is flattening in places, largely because government bond yields between 3 months and 5 years out have risen meaningfully, while the yield on the 10 year and longer durations have risen at a slower rate. This is, in part, because many see the Fed raising rates in 2022. The result is a generally flatter yield curve, which could mean that inversion is...

Call this “The running of the Bull(ard)s mouth.” Federal Reserve Bank of St. Louis President James Bullard said he supports raising interest rates by a full percentage point by the start of July — including the first half-point hike since 2000 — in response to the hottest inflation in four decades. “I’d like to see 100 basis points in the bag by July 1,” Bullard, a voter on monetary policy this year, said in an interview with Bloomberg News on Thursday. “I was already more hawkish but I have pulled up dramatically what I think the committee should do.” Bullard’s...

On Monday at 11:30 EST, The Federal Reserve Board of Governors will have a closed door session to determine if they should raise rates and/or change the speed of Fed asset purchases. Between raging inflation and the potential wag-the-dog Russian/Ukraine tensions, The Fed has a lot to consider. Particularly if they are watching the 10Y-2Y Treasury yield curve plunging. And we have the USD Inflation Swap Zero Coupon rate rising again. While the Treasury and US Dollar Swaps curve are upward-sloping (not surprising since The Fed has aggressively pushed short-term rates to near zero), we are seeing Treasury Inflation Protected...

Raphael Bostic and Goldman Sachs are both calling for dramatic rate increases to fight inflation … that they helped cause with their monetary stimulypto. I call this The Fed’s March of the Toreadors as The Fed now attempts to kill the bull market. (Bloomberg) — The Treasury yield curve flattened to the lowest level in over a year on Monday as the prospect of a super-sized Federal Reserve rate increase in March gained traction, weighing disproportionately on shorter-dated tenors. Two-year U.S. yields climbed as much as 4 basis points after Raphael Bostic, the president of the Fed’s Atlanta branch, said...

Treasury Secretary Janet Yellen is having trouble with the curve (yield curve, that is). It keeps inching up, meaning that Treasury’s cost of debt financing is inching up too. As Treasury yields keep rising, so does the problem of financing the massive Federal debt load. Here is a chart showing the interest outlays in the Federal budget against the cost of Federal funding at the 10-year and 2-year tenors. Now, The Fed is predicted to raise their target rate 4 times in 2022 (according to Fed Funds Futures data) and it looks like a whopping 100 basis points (or 1%)....

Well, Omicron is hitting hard. Not the virus itself, but governments’ reaction to the virus. The NY Empire Manufacturing Index has tanked into negative territory. New orders are down 5%. On the energy front, West Texas Intermediate Crude Oil futures are up 79% since January 1, 2021 while regular gasoline prices are up “only” 50% over the same period. How about inflation and the Treasury yield curve? Inflation has soared to 40-year highs under Biden as energy prices (WTI Crude Futures) have soared 79%. Maybe they should play the Darth Vader theme when Biden goes to the podium to stammer.