Bond Traders Get Ready for Yield-Curve Inversion as Soon as Next Week
- Gap between 7-, 10-year notes now around 4 basis points
- Spread has been a harbinger of past three inversions
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The first step in the inversion of the U.S. Treasury curve may be poised to occur as soon as next week.
The spread between 7- and 10-year yields slipped below 3.5 basis points Tuesday, after shrinking to 2 basis points last month, the smallest gap since at least 2009. The difference between the maturities, the narrowest among on-the-run benchmarks, may not be particularly well-watched. But its descent into negative territory has historically been a harbinger of similar moves elsewhere along the curve, often in as little as a few days, according to data compiled by Bloomberg and BMO Capital Markets.