Yield Curve Carnage Continues

The US Treasury yield curve collapse continued its unending path to inversion overnight with 2s10s plunging to sub-60bps and 5s30s hits a 65bps handle for the first time since Nov 2007.

 

2s10s has flattened for 3 days straight, 6 of the last 7 days, and 14 of the last 17 days to a 58bps handle...

 

5s30s has flattened 3 days straight, 6 of the last 7 days, and 16 of the last 19 days to a 65bps handle...

 

As a reminder, it took The Fed hiking rates to 5.25% in the last cycle before investors finally gave in and financial conditions tightened... for now as financial conditions ease towards record levels, despite a hiking and normalizing Fed, so the yield curve collapse accelerates...

 

As a gentle reminder to all those shrugging this off, BofA reminds that in seven out of seven occasions in the last 50 years an inverted yield curve has been the prelude to recession.

In fact, the last four times the US yield curve was at these levels, the US economy was already in recession...