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US Bond Market Flashes Recession Warning as Yield Curve Inverts

© Reuters.

(Bloomberg) — A closely-watched part of the US yield curve inverted Monday as investors dumped short-term debt on concerns that aggressive rate hikes will lead to an economic slowdown.

The US two-year yield exceeded the 10 year for the first time since early April. Short-term yields that are higher than long-term yields are abnormal, and are historically seen as heralding a potential recession.

Concern has been mounting that surging inflation will require more rapid Federal Reserve policy tightening, which in turn will reduce consumer spending and business activity. US inflation data on Friday rose to a fresh four-decade high, surprising economists.

©2022 Bloomberg L.P.

US Bond Market Flashes Recession Warning as Yield Curve Inverts

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