Yield Curve Flashing Warnings Sign

Yield Curve Flashing Warnings Sign

The spread between the 30 year Treasury yield and the 2 year Treasury yield is back down to the lows of last year. The only time in over a decade that we saw the yield curve this flat was back in 2007 when all hell was breaking loose.

Look a little further up the curve, the spread between the 30-year and the 5-year is down to levels last seen in 2007: the bond market is making a statement here.

The yield on the 10-year Treasury, which is a measure of future economic growth expectations, is down to 2.16 percent today, which is astounding when you consider we are repeatedly hitting record highs in the U.S. stock markets with a 4.3 percent unemployment rate!

10 Year Treasury Rate Chart

Lest we forget that the Atlanta Fed GDPNow forecast for the second quarter was just lowered to 1.9 percent, after a painful 1.2 percent in Q1, then back down to 1.5 percent for Q3 – accelerating economy?

Oh yes, and manufacturing production is lower today than it was in December 2005.

About the Author

Lenore Hawkins, Chief Macro Strategist
Lenore Hawkins serves as the Chief Macro Strategist for Tematica Research. With over 20 years of experience in finance, strategic planning, risk management, asset valuation and operations optimization, her focus is primarily on macroeconomic influences and identification of those long-term themes that create investing headwinds or tailwinds.

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