Bond Market Flashes Recession Warning Before Round of Auctions
- Ten-year U.S. yield is below 3-mo. rate, first time since 2007
- Note sales totaling $131 billion to test demand as yields fall
This article is for subscribers only.
Investors are about to absorb $131 billion of Treasury note auctions at the lowest yields in months, after they piled into U.S. debt following a dovish Federal Reserve decision and fresh signs that global growth is weakening.
The week kicks off with a closely watched segment of the U.S. yield curve foreshadowing a recession: The gap between 3-month and 10-year rates is now negative. In the lead-up to the economic downturn that began late in 2007, this part of the curve initially flipped to inverted in early 2006. The curve’s latest collapse came amid reports showing weakness in France and Germany, while an index of American manufacturing slowed.