One-ounce Britannia gold coins stacked at Gold Investments Ltd. bullion dealers arranged in London, U.K., on Thursday, March 17, 2022. Gold rose for a second day as investors weigh the trajectory of the Federal Reserve’s rates tightening cycle against risks to growth from the war in Ukraine. Photographer: Chris Ratcliffe/Bloomberg
Locked
Fed’s yield-curve barometer starts flashing recession risk
As the US central bank tries to use rate increases to bring down inflation, the risk is that economic activity responds more quickly, and that the Fed won’t lower rates until there’s progress on inflation.
By Michael MacKenzie
(Bloomberg) — A classic recession warning is flashing in the US Treasury market, where the 10-year note's yield fell below the three-month bill's, a rare occurrence that signals investors anticipate dire economic consequences of the Federal Reserve's campaign against inflation.
The 10-year dipped as much as 0.08 percentage point below the three-month in US trading Wednesday, after brief and smaller inversions Tuesday and in early August. The day's lows for both yields were reached shortly after the Bank of Canada raised its policy rate by half a percentage point, less than expected.
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