The very front end of the US Treasury curve is about to move up, with Fed funds to settle around 4.33%.
As you can see, that's higher than anything beyond 1-year, prompting a wide inversion in 3m bills to 10-years, which is a benchmark that many at the Fed watch as a recessionary indicator. For their part, some of them have now brushed that off because of skews around inflation or have shrugged it off as a sign that only a mild recession is coming.
But I think 2s10s might be more instructive at the moment. After CPI, the market started to price in less Fed hiking and after hitting -90 bps, there was a strong reversal in 2s10s that could be confirmed by a dovish Powell today. So this is the chart I'll be watching into the weekend. A continued climb would indicate that the Fed 'gets it'.
