As far as we can tell, Fed Chair Powell gave the first denial of the orange flashing warning signal provided by the US Treasury yield curve. And for those who aren’t keeping tabs on the latest curvology, the Treasury yield curve in the 3-year to 30-year segment is basically inverted. What hasn’t inverted yet, are the two most widely followed curve spreads: the 3-month 10-year spread, and the 2-year 10-year spread. At the time of writing, the former was at 191bps while the latter was at 14bps. As a rule of thumb, the two spreads narrow by half the increase in the federal funds rate during past tightening cycles.


For the full report click here