US yield curve inversion deepens as the shackles are off
30-year bond yields have fallen by more than 10 bps today
I reckon the big question here is can the Fed afford to ignore this signal?
Markets don't seem to be buying into that despite Fed officials having dismissed this recession indicator over the past year or so. Their official tagline is "this time is different". I guess we'll have to wait and see if they will be right or not.
The 2s-10s fall is deepening to over 1 bps now and it looks like it may not just be a hiccup. As such, the next key thing to watch out for is when will the inversion revert back.
In 2007, the inversion switched back about 6 months before the recession officially began. In 2001, the timeline was about 3 months. Let's see if those timelines will be able to fit into the current economic situation.
For now, markets are a bit fidgety and in a bit of a panic. The yen and franc continue to be the major beneficiaries in the currencies space as stocks continue to tumble alongside yields.
S&P 500 futures are down by over 1% now: