US Treasury yields rose and remained upside down on Tuesday morning, amid concerns that a recession may be on the horizon.
return on Two-year treasury bonds It rose 3 basis points to 2.461% at 3:30 AM ET, while the index 10-year treasury bond yield It gained 2 basis points at 2.4413%. return on 5 year US government bonds It moved 3 basis points to 2.5924% and 30-year Treasury yield It added 2 basis points at 2.499%. Returns move inversely with prices and one basis point is 0.01%.
5-year and 30-year Treasury yields flipped early last week for the first time since 2006. Prices for 2-year and 10-year Treasuries, the main part of the yield curve that investors have been watching, flipped Thursday for the first time since 2019.
Yield curve swings historically occurred before recessions, as investors signaled their doubts about the economy’s near-term health by selling short-term bonds in favor of long-term debt. There are concerns that the Fed’s rate hike, along with rising inflation, could affect economic growth.
However, not everyone is convinced.
Longview Economics CEO Chris Watling told CNBC’s “Squawk Box Europe” on Tuesday that while a yield curve inversion is an indicator of economic contraction, it is “one of many and really the only one that indicates recession risks in the future.” The current time and it could be very early, even two years early.”
Investors will scrutinize the minutes of the Federal Reserve’s previous meeting, due out on Wednesday afternoon, for any clues to his plans to tighten monetary policy.
On Tuesday, Fed Governor Lyle Brainard is scheduled to speak about the divergence in the experience of US household inflation, at the Federal Reserve’s conference in Minneapolis, 10:05 a.m. ET.
Import and export data for February is due at 8:30 AM ET. S&P Global’s final PMI readings for March are due at 9:45 AM ET, while the ISM Non-Manufacturing PMI for March is due out at 10 AM ET.
Meanwhile, Ukrainian President Volodymyr Zelensky has vowed to pursue allegations of war crimes against Russian forces in the occupied areas of the country. Zelensky is expected to address Tuesday at an emergency meeting of the United Nations Security Council.
There are no auctions scheduled for Tuesday.
– CNBC’s Sam Meredith contributed to this market report.
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