WASHINGTON–U.S. Treasury yields fell further yesterday, with the yield spread between the two- and 10-year treasuries at its most inverted point since 2007.
The 10-year Treasury note yield fell 2.7 basis points to 1.463%, a day after the benchmark rate hit its lowest level since July 2016, reported MarketWatch. The two-year note ratewas down 1.8 basis points to 1.510%, while the 30-year bond yield declined five basis points to 1.919%.
As CUToday.info has reported, there has been considerable debate around the inversion of the yield curve, with some suggesting it is a harbinger of a recession and others dismissing such claims, saying the market is in a unique situation that is different from similar yield curve inversions in the past.
As that debate continues, key measures of the yield curve’s slope remained inverted yesterday. The spread between the two-year note yield and the 10-year note yield fell to a negative five basis points.
What’s Driving Market
MarketWatch said in its analysis that the inversion is being driven by numerous geo-political factors, including an announcement by U.K. Prime Minister Boris Johnson that he would ask the Queen to extend the suspension of Parliament until Oct. 14, two weeks before the twice-delayed deadline when the U.K. must leave the European union. This would make it difficult for opponents of a no-deal Brexit to prevent the U.K. from exiting the EU without a trade deal in hand.