Bond Traders Dismiss Stock-Market Rally as Misguided Euphoria
- Gap between 2 and 10 year yields briefly hit lowest since 1982
- Citigroup model suggests a more than 50% chance of recession
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For just a moment Wednesday, so brief that if you blinked you may have missed it, the US Treasury curve inverted to levels not seen since Paul Volcker waylaid the economy with his fight to break inflation in the early 1980s.
While you should only read so much into such a fleeting move, that it occurred at all was a stark reminder of just how convinced the bond market has become in its collective belief of a looming economic downturn, especially in the face of surging stocks and plunging volatility in recent weeks.