Treasury yield curve inverts for first time since 2007, underlining recession worries
A closely watched measure of the Treasury yield curve inverted Friday for the first time since 2007, highlighting fears that a global slowdown will take a toll on the U.S. economy.
The yield on the 10-year Treasury note TMUBMUSD10Y, -3.17% fell nearly 11 basis points to 2.428%, pushing it below the yield on the three-month T-bill at 2.453%. An inversion of that portion of the yield curve is seen as a reliable warning of a potential recession within a year or two. Inversions have preceded every U.S. recession going back to 1955 with only one false positive, researchers at the San Francisco Federal Reserve found. While inversions of other portions of the curve have also served as recession indicators, the researchers said the 3-month/10-year measure is the most reliable.
Bond yields around the world tumbled after a raft of disappointing purchasing-managers-index readings for the eurozone affirmed fears of lackluster growth in the 19-member group already contending with a trade slowdown and Brexit uncertainty. This comes after the Federal Reserve cut back on its interest-rate projections from two to none this week, with Fed Chairman Jerome Powell citing global economic headwinds for the cautious stance. Yields tend to retreat when growth prospects sour, and inflation fears have waned.
U.S. stocks, meanwhile, accelerated losses as the yield curve inverted.
https://www.marketwatch.com/story/10-year-german-bond-yield-flirts-with-zero-after-lackluster-eurozone-pmis-2019-03-22
This is not a good sign.