These inversions are strong recession warnings although the spreads are small and the most watched 2-10 spread is still positive.
However, the 3-year, 5-year, and 7-year notes all yield more than the 30-year long bond.
Curiously, the 20-year note yield is way out of line with everything else as the following chart shows.
Yield Curve to Scale
The first bar is the Effective Fed Funds rate at 0.83%. Every following bar represents three months. Values between years are extrapolated evenly.
From three years to thirty years the yield curve is flat to inverted except for the 20-year note. I am not aware of anyone with an explanation for curious behavior.
Yields at the short end of the curve rose sharply vs the longer-term notes following the consumer price report. That led to the inversions shown above.
Why Did Economists Blow the CPI Forecast So Badly This Month?
For discussion of the May CPI report. please see Why Did Economists Blow the CPI Forecast So Badly This Month?
Also note the national price of gas topped $5.00 today for the first time. Yesterday I reported the Average Gas Price Just a Penny Shy of $5.00 a Gallon
This post originated at MishTalk.Com.
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