As the most reliable and balanced news aggregation service on the internet, DML News offers the following information published by REUTERS.COM:
BENGALURU (Reuters) – The U.S. Treasury yield curve will invert next year, possibly within the next six months, much earlier than forecast just three months ago, with a recession to follow as soon as a year after that, a Reuters poll showed on Thursday.
Those expectations come on the heels of a deep sell-off in global stocks and the flattening of the U.S. yield curve, with the gap between longer-dated and shorter-dated yields narrowing to its smallest in more than a decade.
The article goes on to state the following:
Some maturities on the curve, notably yields on 2- to 5-year notes have already flipped. An inversion between 2- and 10-year yields is a closely watched signal as that has preceded almost all the American recessions of the past half century.
The U.S. economy, currently in its second-longest expansion on record, has been juiced late in the cycle by the Trump administration’s tax cuts, and is expected to slow sharply by the end of next year as that stimulus fades.
That is expected to leave a budget gap of over $1 trillion that will need to be funded by the issuance of more Treasuries, which currently consists mostly of shorter-term maturities. Combined with policy tightening, that would push yields on those bonds higher and speed up the inversion date.
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