Troubling signs from yesterday:
" Long-term Treasury rates added to their monthlong slide Tuesday, aggravating a key yield curve inversion and sending the 10-year yield to its lowest level against the 2-year rate since 2007.
The yield on the benchmark 2-year Treasury note, more sensitive to changes in Federal Reserve policy, fell to 1.526%, 5 basis points above the 10-year note’s rate of 1.476% after closing inverted on Monday. Before August, the last inversion of this part of the yield curve was the one that began in December 2005, two years before the financial crisis and subsequent recession.
The spread between the 3-month Treasury yield and that of the 10-year note — the Fed’s preferred inversion metric — slumped to -52 basis points, its lowest since March 2007.
The 30-year bond yielded 1.955% and was poised to close below the 3-month bill yield for the first time since 2007.
A 10-year rate below the 2-year yield is viewed by fixed income traders as an important recession prognosticator, marking an unusual phenomenon as bondholders receive better compensation in the short term. The Dow Jones Industrial Average retraced a 155-point gain on Tuesday as bond yields fell."