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Wall Street’s Favorite Recession Signal Is Back as Curves Invert

  • Short-term yields climb faster as Fed hikes to slow economy
  • May inflation surge spurs speculation of 75-basis point hike
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Yield Curve Will Invert Again: Morgan Stanley's Hornbach

The Federal Reserve’s bid to contain the hottest inflation in decades will end in a recession. That’s the message the bond market is telegraphing.

Key sections of the Treasury curve have inverted after Friday’s US inflation shock drove traders to boost bets on the pace of Fed tightening. Two-year yields exceeded 10-year rates for the first time since April on Monday, while five-year yields soared as much as 17 basis points above 30-year rates in the widest inversion in over two decades.