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US Treasury Yields 5-Year Duration and Shorter

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I created that chart last night.

Today today's Plunge in Durable Goods Orders, the yield on 2-year treasuries fell 4.1 basis points to 1.735%. The yield on 3-year treasuries fell 4.6 basis points to 1.837%. The yield on the 1-year bond fell 1.8 basis points to 1.592%.

Current Spreads

10.2 basis points separate 2-year and 3-year treasuries.

14.3 basis points separate 1-year and 2-year treasuries.

It will not take a Fed rate hike for the curve to invert somewhere, but the more the Fed hikes the quicker the inversion.

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The above chart shows spreads highlighted in blue. the Following chart shows the strength of the move in basis points, not spreads, from a year ago.

Treasury Yields 2013- Present

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We are not 4 hikes away from inversion as some think. Rather, were are likely one or two hikes away, or possibly even none. One bad economic report might cause inversion this year.

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The bond market does not think much is left of this recovery, and neither do I.

Mike "Mish" Shedlock