The Big Take
Bond Market Is Overplaying the Risk of a Deep Recession
Trading in other major markets suggests a painful economic downturn isn’t as set in stone as Treasury investors think
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When banks started going belly-up, the reaction in bonds was emphatic. Two-year Treasury yields slid a percentage point over three days in March, the most since 1982.
For traders accustomed to treating such signals as sacrosanct, the message was obvious. Gone were the days when inflation was their main menace. Rates showed stress in the financial system made a recession inevitable.