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Brian Chappatta

A New U.S. Yield Curve Is Racing Toward Inversion

Watch the spread between two-year and five-year Treasuries.

Keep an eye on the short end.

Keep an eye on the short end.

Photographer: Victoria Jones/AFP/Getty Images

The prospect of an inverted U.S. Treasury yield curve is back on bond traders’ radars. It’s just not the part they expected.

For most of this year, the yield spread between seven- and 10-year Treasuries was the smallest of all benchmark U.S. maturities, never closing above 10 basis points and dipping to as low as 2 basis points in mid-May. Some strategists predicted that the difference would eventually fall below zero and encourage other parts of the curve to invert. That never happened.