Treasury yields invert, warning of possible recession

Treasury yields invert, warning of possible recession

Trader Joe Dente, center, and specialist Mark Fitzgerald work on the floor of the New York Stock Exchange, Tuesday, Aug. 13, 2019. Stocks shook off an early stumble and edged higher on Wall Street led by gains in technology and health care companies. (AP Photo/Richard Drew) NEW YORK (AP) — An economic alarm bell has sounded in the U.S., sending warning signs of a possible recession ahead. Yields on 2-year and 10-year Treasury notes inverted early Wednesday, a market phenomenon that shows investors want more in return for short-term government bonds than they do for long-term bonds. It’s the first time that has happened since the Great Recession and it can be a sign that investors have lost faith in the soundness of the U.S. economy. What appeared to be a slight thaw in trade relations between the U.S. and China that had sent markets sharply higher Tuesday was quickly forgotten Wednesday. At the opening bell the Dow tumbled 400 points. The yield on the benchmark 10-year Treasury note hit 1.622%, falling below the yield of a 2-year, which was 1.634%. The last inversion of this part of the yield curve began in December 2005, two years before the Great Recession made landfall. An inversion like the one taking place Wednesday has preceded the last nine recessions dating back to 1955, though it doesn’t always mean recession is imminent, as in 1966 when no recession formed after an inversion. When a recession might hit, if it does, is tricky. […]

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