Yield curve inverts for third time amid recession fears

Thursday, 22. August 2019 16:24

The main Treasury yield curve inverted for the third time in a week on Thursday as concern over the Federal Reserve's inability to prevent a recession mounted. The jump in yields came after the heads of the Federal Reserve Bank of Kansas Esther George and Federal Reserve Bank of Philadelphia Patrick Harker both ruled out the possibility of further rate cuts.

The US two-year note yield rose by 0.025 basis points to reach 1.594% at 10:32 am ET while the yield on the 10-year Treasury increased by 0.012 basis points to hit 1.586% at the same time. Meanwhile, the yield on the 30-year bond added 0.018 basis points to reach 2.07% at 10:34 am ET.

The inversion, which is seen as a key recession indicator, was the third in the last 10 days, with the first taking place on August 14 and the second one week later. United States President Donald Trump's administration previously downplayed the possibility of a recession taking place and insisted the country's economy was in "pretty good shape." However, both Trump and his trade adviser Peter Navarro warned that the inversion was a sign that the Fed had to further cut interest rates.

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