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Powell’s Bond Market Recession Indicator Is Sending a Warning

  • Three-month bill premium has fallen the most on record in July
  • Market expects the Fed to pivot on rising recession risks: TD
Bloomberg business news
Strategists Debate Fed’s Path, Impact
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The Federal Reserve’s interest-rate hikes are wearing out their welcome in bond markets, with a measure of the yield curve that Chair Jerome Powell has highlighted as a recession indicator sending out a warning message. 

The difference between rates on where three-month bills are now and where they will be in 18 months has tumbled about 95 basis points in July, the biggest monthly decline in data starting in 1996. A vast swathe of the US yield curve inverted in recent weeks as recession fears spurred investors to pile into longer maturities.