A widely-watched gauge of the yield curve’s slope, the spread between the 2-year note
and the 10-year note
turned more negative on Tuesday, after inverting last week. The spread between the two maturities stood at a negative 4 basis points, Tradeweb data shows. The yield curve’s slope is usually positive as investors demand more compensation to own long-term debt against inflationary pressures or monetary policy uncertainty. An inversion of the yield curve, or a negative yield spread, thus points to widening concerns about the health of the economy and is seen as an accurate recession indicator. Long-term government bonds have rallied in recent weeks, pushing their yields lower than their short-term peers, amid increasing signs that a trade deal between U.S. and China remain distant.
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