Key Slice of U.S. Yield Curve Becomes Most Inverted Since 2007
- Dimmed outlook for U.S.-China trade deal triggers haven buying
- Flattening trade faces risks from Fed preferred inflation data
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A key slice of the Treasuries yield curve became the most inverted since 2007, as growing angst over trade friction is overshadowing expectations that the Federal Reserve will cut interest rates by year-end.
The gap between three-month and 10-year rates dipped Wednesday to negative 12.3 basis points, breaking past a March level, when it first reached levels last seen in the global financial crisis. The spreads between most other sectors of the curve have narrowed as well. Historically, an inverted curve has been a signal that a recession is looming.