Near Full Inversion: 10-Year Note Inverts With 1-Month T-Bill

-edited

The yield curve nears full inversion. Every duration higher than 1-month other than the 30-year long bond is inverted.

Those waiting for a full inversion before worrying about recession can start worrying today.

Yield Curve Spreads

There are too many inversions for me to draw all the arrows. Suffice it to say the 10-year note has now inverted with the 1-month T-Bill.

And from the 5-Year Note through the 1-month T-bill, every duration level is inverted with every duration level beneath it.

We have near-full inversion except for the 30-year long bond.

Recession Time!

Comments (14)
No. 1-7
Ted R
Ted R

RECESSION. One is long overdue. Hopefully it will curb this addiction to debt and make everyone more responsible with regards to borrowing money, including government at all levels.

Schaap60
Schaap60

Doesn't the 3 month with a lower rate than the one month suggests at least some chance of a Fed cut in the next three months? If it does, I wonder what that chance is.

THX1138
THX1138

Who's worried? I'm in 10 yr treasuries. :)

Realist
Realist

Hi Mish. I agree that if the yield curve inversions remain in place over the next month, that would increase the chance of a recession beginning sometime in the next 12-24 months. You make it sound like the US is already in recession.

AWC
AWC

Liquidity Trap on deck? All eyes on Jay. He's da man.

Mish
Mish

Editor

"You make it sound like the US is already in recession."

I don't know if the US is in recession or not. It could be and would not surprise me.

The next couple of jobs reports may provide a clue. Then again, I have been pondering for a very long time, the notion that job losses will be minimal in the next recession. Why? Overexpansion. It takes a minimum number of people to staff stores no matter the level of business.

themonosynaptic
themonosynaptic

OK, the whole 10-year/2-year inversion thingy seems a lot of baloney to me. It looks far more like the 2 year treasury reacts to the Fed Funds rate far more closely than the 10-year rate - indicating that the volatility for the Fed Funds rate is far greater over 10 years than it is over 2 years, and thus the rates are impacted appropriately (i.e. no shit Sherlock).

So you either accept that: (1) the Fed triggers recessions by raising rates; (2) the Fed mitigates the extremes in upcoming recessions by letting the air gently out of the bubble before it bursts; (3) a combination of (1) and (2); (4) the Fed doesn't know what it is doing and is triggering recessions by mistake; or (5) a combination of (3) and (4).

I'm going with (5). Thus worrying about "inversions" and "ranges of inversions" is akin to looking at clouds and wondering if it is going to rain on your parade.