US Treasury yields rose and remained inverted Tuesday morning amid fears a recession is on the horizon.
The 2-year Treasury yield was up 3 basis points to 2.461% at 3:30 am ET, while the benchmark 10-year Treasury yield was up 2 basis points to 2.4413%. The US 5-year Treasury yield rose 3 basis points to 2.5924% and the 30-year Treasury yield rose 2 basis points to 2.499%. Yields move inversely with prices and 1 basis point equals 0.01%.
5-year and 30-year government bond yields reversed for the first time since 2006 early last week. Yield rates on 2-year and 10-year government bonds, which make up the bulk of the yield curve watched by investors, then turned around on Thursday for the first time since 2019.
Yield curve inversions have historically occurred before recessions, when investors expressed doubts about the near-term health of the economy by selling short-dated bonds in favor of longer-dated debt. There are concerns that the US Federal Reserve’s aggressive rate hikes, coupled with rising inflation, could weigh on economic growth.
But not everyone is convinced of this.
Chris Watling, CEO of Longview Economics, told CNBC’s Squawk Box Europe on Tuesday that while the yield curve inversion is an indicator of an economic slowdown, it is “one of many and really the only one that points to a recession risk right now it can be extremely early, up to two years early.”
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Investors will be scouring the minutes of the Fed’s final meeting, due Wednesday afternoon, for clues about its plans to tighten monetary policy.
On Tuesday, Fed Governor Lael Brainard will speak at the Federal Reserve Bank of Minneapolis conference at 10:05 a.m. ET on the fluctuations in the experience of inflation in US households.
Import and export data for February will be released at 8:30am ET. The final reading of the S&P Global Purchasing Managers’ Index for March is expected to be released at 9:45 am ET, while the ISM Non-Manufacturing Purchasing Managers’ Index for March is due to be released at 10:00 am ET.
Meanwhile, Ukrainian President Volodymyr Zelenskyy has pledged to investigate allegations of war crimes against Russian forces in occupied regions of the country. Zelenskyy is expected to speak at an emergency meeting of the United Nations Security Council on Tuesday.
There are no auctions on Tuesday.
— CNBC’s Sam Meredith contributed to this market report.