Bond yields are surging, and the scary recession warning everyone was talking about has gone away

Bond yields are surging, and the scary recession warning everyone was talking about has gone away

Getty Images The bond market has officially switched off its recession alarm and is pointing to the potential for stronger growth. Since the summer, when fear of a global economic meltdown gripped the bond market, conditions in the Treasury market and economy have changed. So has the outlook for U.S.-China trade talks, and as a result bond yields, which move opposite price, are rising. Now that the Fed has cut rates three times, short-end yields, like the 2-year, are not rising as fast as long duration yields. The 2-year at its high, was up 10 basis points on Thursday but the 10-year yield snapped higher by about 14 basis points on reports that tariffs could be dropped. The 10-year yield rose as high as 1.97% in its biggest one-day move since the 2016 presidential election, but it was at 1.928% at the end of the day. The 10-year was also at its highest level since August 1, the day t hat Trump tweeted he could put new tariffs on China, a negative event for markets. It was also the day after the Fed cut interest rates by a quarter point, its first of three cuts. Short duration yields are no longer higher than the rates on the long end, like the benchmark 10-year yield . That phenomena is called an inverted yield curve, and it is a signal in financial markets that a recession could be on the horizon. That sentiment peaked in late August and September. Now the […]

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