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The Rise and Collapse of Treasury Spreads With the Fed Doing Nothing the Whole Time

US treasury spreads in the past year are almost a mirror image centered around March of 2021.
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Various treasury spreads data from the New York Fed, calculations and chart by Mish

Various treasury spreads data from the New York Fed, calculations and chart by Mish

The chart shows the difference between pairs of US treasury notes and bonds. 

Treasury Spreads

  • 30 Year Minus 20 Year: -0.08 (Inverted)
  • 10 Year Minus 7 Year:  +0.02 
  • 10 Year Minus 5 Year: +0.12
  • 10 Year Minus 2 Year: +0.39
  • 5 Year Minus 3 Year: +0.09

Spreads generally peaked in the March-April period of 2021. The two-ten spread peaked at 1.59 percentage points on March 29, 2021.

Economists watch the 2-10 spread because it typically inverts before a recession. It's quite possible we get no such signal this time.

How fast will the Fed hike?

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Traders bet the Fed will get in 6 or this year down from 7 a couple weeks ago. I am sticking with no more than three. 

This post originated on MishTalk.Com.   

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