Treasury yield curve holds near inversion at key part

Thursday, 22. August 2019 08:29

Prices of United States government debt paper rallied on Thursday, squeezing yields, in a clear market message to the Federal Reserve to support investors and the economy with interest rate cuts and quantitative easing. The spread between the ten-year and two-year yield was under one mere basis point. Yesterday it turned negative shortly in a phenomenon also called yield curve inversion, though it recovered before closing, following reluctance in the minutes from the Federal Reserve's latest meeting.

Also of note, the Congressional Budget Office offered a grave picture for the impact on fiscal balance and gross domestic product from the recent expansionary budget deal. It came alongside chronic concerns about the trade war with China and, potentially, other US partners, lagging inflation and the Brexit pains. Central bankers are gathering in Jackson Hole for the Fed's annual symposium.

The US two-year yield was down 2.5 basis points at 1.553% at 2:25 am ET. The ten-year rate slumped 3.3 points to 1.558%. The yield on the 30-year bonds dropped 4.4 points to 2.033%. Corresponding futures grew by 0.05%, 0.17% and 0.4%, respectively.

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