- 2s10s spread hits 31 basis points
Fed research and some officials have dismissed 2s10s inversion as a sign of looming recession but its track record is sparkling. Morever, an inversion of 31 basis points its a much stronger signal than something like the short visit to negative from early April.
This is the most-inverted the curve has been in 20 years.
The Fed prefers 3 month bills to 10-years and that might soon invert as well with the 10-year now at 2.76% and the Fed set to hike to 2.25-2.50% and likely beyond in September.
I’m sympathetic to the Fed argument that a technical recession right now isn’t meaningful but in the months ahead we might get a real one.