Bond market’s most deeply inverted gauge is pointing to ‘large slowdown in economic growth’ and ‘deep recession’
The most deeply inverted part of the U.S. yield curve is one that hasn’t sent a false signal about the prospects of a U.S. recession in more than a half-century of research.
That’s the spread between 10-year and 3-month Treasury yields, which was around 153 basis points below zero as of Thursday — reflecting a 3-month T-bill rate TMUBMUSD03M, 4.821% that’s trading well above its 10-year counterpart TMUBMUSD10Y, 3.288%. The large difference between the two rates is pointing to the likelihood of a “deep recession,” according to Campbell Harvey, the Duke University professor who pioneered the use of the spread as an indicator of future economic growth.
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