The Yield Curve Inversion Extends to its Largest Point Since 2000
2022.07.13 22:41
Budrigannews.com – An indicator of economic distress, the yield curve inversion between 10-year and 2-year rates, moved to its biggest point since the year 2000 on Wednesday.
An inverted yield curve occurs when a yield curve graph inverts in the opposite direction, with the shorter-term US Treasury bonds offering a higher yield than the long-term Treasury bonds. A yield curve inversion is said to signal a recession and is widely watched by market participants.
The gap between the 2-year and 10-year extended further during Wednesday’s session, with the 2-year moving as high as 21.7 basis points above the 10-year benchmark, past 2006 levels.
The 2-year is more sensitive to shifts in monetary policy, with today’s move coming following data showing the consumer price index rose 9.1% year-over-year basis in June.
There are increasing concerns that monetary policy adopted by central banks globally in an attempt to rein in inflation could end up forcing the economy into recession.
