Well That Hasn't Happened Before - Exhibit 2

We have never, ever, seen the long- and short-end of the Treasury yield curve so anti-correlated.


The 2Y and 10Y yields have never been anti-correlated (on a 2-year rolling window) and now are strongly anti-correlated.

Day after day we are told that a recession cannot be near since the yield curve is not inverted (a meme we previously destroyed here and here) and while the current 2s10s curve is near 7-year flats/lows; with ZIRP the yield curve's signaling ability has been diminished greatly.

The apparent collapse of the yield curve's internal relationship seems predicated on the myth of a 'strong US economy' driving up short-term rates on every jawbone by The Fed, and the reality of global deflation, liquidity squeezes, and debt saturation that is weighing on economic growth prospects, structurally weighing on long-term rates.


Chart: Bloomberg

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See Exhibit 1 here