One More Hike To Inversion - Treasury Curve Plunges To Flattest Since July 2007

One more rate hike and it would appears the entire curve out to 10Y maturity will be inverted...

2s30s is testing down towards 40bps, but 2s5s dropped well below 20bps

And 2s10s is now below 30bps for the first time since July 2007

Remember 9 of the last 10 curve inversions have rapidly presaged a recession (and the last two curve inversions saw the stock market cut in half).

Comments

Cognitive Dissonance TheElder Thu, 07/05/2018 - 11:35 Permalink

While obviously the concept is silly, the punch to the head came at the very end of the clip.

"Why am I the only one who can see the problem?"

It is the illegal in illegal immigration so many have a problem with, NOT necessarily the immigration itself.

I suspect the inversion of the yield curve, and the deepening of the existing depression that soon follows, will solve many problems coming round the bend.

In reply to by TheElder

Sofa King Thu, 07/05/2018 - 11:33 Permalink

I took a good look around this week and without cheap money, we are seriously fucked as a society.

 

It is really a scene when you take a peek from the other side of the looking glass.

 

Then again, when you see the legions of unwashed heading to their summer homes, it kinda makes you feel better knowing this will all come to a catastrophic end, relatively quickly.

Ricki13th Thu, 07/05/2018 - 11:42 Permalink

I was waiting for ZH to finally notice whats going on in the bond market. The fed is losing control of the yield curve. I think this action we are seeing is actually a delayed reaction from the last FOMC meeting in June. Waiting till mid August when the fed has to raise rates in September because of inflation (thanks to tariffs and other facros hitting the consumer). The curve will invert by the end of August. And a meltdown in stocks in September/October 2018. Followed by an official stagflationary recesssion in 2019.

mnzcme Thu, 07/05/2018 - 12:07 Permalink

Red/gold eurodollar pack spread, the second year forward to the fifth year forward is already printing negative for the first time since MARCH of 2000.  Highly correlated to 2/10 treasury but more related to the swaps curve.  Likely negative for banks who need a lower funding cost in relation to longer term lending.

Rufus Temblor Thu, 07/05/2018 - 12:14 Permalink

"...have presaged a recession."  How about presaging an equity bear market?  Note that equities turned down almost immediately at the point of inversion in Jan 2000.  But the inversion preceding the 2008 recession was more than a year before the financial crisis got underway.