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One Section of the U.S. Yield Curve May Invert as Soon as Today

Gap between 3- and 5-year yields is skinniest in a decade
Inversion is likely as end of Fed rate hikes nears, BMO Says

Views Of The Federal Reserve Ahead Of Federal Open Market Committee Announcement — Photographer: Andrew Harrer/Bloomberg

By

Katherine Greifeld and

November 30, 2018, 5:43 PM UTCUpdated onNovember 30, 2018, 7:51 PM UTC

As bond traders scale back Federal Reserve rate-hike expectations, one section of the U.S. yield curve is on a fast track to inversion.

The spread between 3-year and 5-year Treasury yields shrank to less than 0.1 basis point on Friday, the smallest gap in more than a decade. It may turn negative by the end of the day, BMO Capital Markets says, as investors anticipate the end of the central bank’s tightening path.