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Key Fed Yield Gauge Points to Rate Cuts for First Time Since 2008

  • Gap between current and forward T-bill rates turns negative
  • Past fears of easing were ‘more often than not’ validated
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Some of the most accurate gauges of economic health are pricing in lower Fed rates for the first time in more than a decade.

The little-known near-term forward spread, which reflects the difference between the forward rate implied by Treasury bills six quarters from now and the current three-month yield, fell into negative territory on Wednesday for the first time since March 2008. Two-year yields dipped below those on one-year paper in December.