US 5-year and 30-year Treasury yields flipped on Monday for the first time since 2006, raising fears of a possible recession.
return on 5-year treasury bonds It rose 6 basis points to 2.6361% at 5:30 AM ET, while 30 year return It fell less than one basis point to 2.6004%. The 2 year return It jumped nearly 8 basis points to 2.3805% and the benchmark 10 years It rose one basis point to 2.5066%.
This is the first time the shorter-dated 5-year Treasury yield has risen above the 30-year long-term US government bond yield since 2006 – just two years before the global financial crisis.
However, the main yield differential that traders are watching – the 2- to 10-year spread – is still positive for now.
historically, Yield curve inverted before recessionswith investors selling short-term government debt and buying long-term bonds, signaling concern about the health of the economy in the short term.
High inflation, exacerbated by the Russo-Ukrainian war, has further strained the market over the possibility of an economic slowdown.
Sneena Sinha Haldia, global head of private equity advisory at Raymond James, told CNBC:Squawk Box EuropeOn Monday, “investors should be concerned” about yield curve inversion and take note of the position in their portfolios.
She said, referring to the central bank’s efforts to tighten monetary policy in order to mitigate the effects of inflation.
The 10-year bond yield has jumped from 2.15% since the start of last week, after Federal Reserve Chairman Jerome Powell said the US central bank may be bolder with raising interest rates, in an effort to keep inflation in check.
Labor market data is one of the economic indicators the Fed uses to help guide its direction on monetary policy, so investors will be watching employment reports due this week.
The vacancy and labor turnover survey for February is due to be released on Tuesday. It follows the release of the March ADP employment report on Wednesday, a weekly update on jobless claims on Thursday and the March non-farm payrolls report on Friday.
In addition, the personal consumption expenditures index for February, one of the gauges of inflation, is due to be released on Thursday.
On Monday, retail and wholesale inventory data for February is due out at 8:30 a.m. ET.
Auctions are scheduled for Monday for $57 billion in 13-week bills, $48 billion in 26-week bills, $50 billion in two-year bills and $51 billion in 5-year bills.
“Infuriatingly humble alcohol fanatic. Unapologetic beer practitioner. Analyst.”