Here’s a long-term look at the 2/10 Treasury yield spread. Since inverting late last summer – ever so briefly – the 2/10 spread has started to widen, and currently sits at 55bps. The Fed is controlling the front end of the curve, and will continue to do so, which may very cause the 2/10 spread to keep widening. Historically, inversions followed by steepening usually signal a looming recession (without a tail-event like COVID-19 creating one).
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|Chart of The Day – June 16, 2020|