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Part of the Treasury yield curve just saw its steepest inversion since 2000 as bond markets flashed recession warnings

Part of the Treasury yield curve just saw its steepest inversion since 2000 as bond markets flashed recession warnings

The yield on the two-year Treasury note moved further behind the 30-year yield on Thursday, marking the deepest inversion between the two notes in 22 years, as fresh inflation data, bets on rate hikes and recession fears widen the gap.


The two-year yield jumped six basis points to 3.85% on Thursday. That’s 38 basis points above the 30-year Treasury yield of about 3.47% and the most inverted of the two since 2000. The yield on the two-year note rose sharply on Tuesday after August inflation data showed that rising prices slowed, but not as much as markets had hoped.

The inverted yield curve is a closely watched indicator of potential recession in the near to medium term. The inversion essentially reverses the conventional thinking that long-term debt carries more risk than short-term liabilities. The current spread between the two-year and 30-year yields is the largest gap between US benchmark rates.

The Federal Reserve is expected to take strong steps to tackle inflation at its next policy meeting, with Wall Street widely expecting a 75 basis point hike after the release of August inflation data this week. Some have said the central bank could push rates as high as 9% to really tame inflation.

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