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Tuesday's Market Minute: Watch Treasuries

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Tuesday's Market Minute: Watch Treasuries

The Treasury yield curve has been warning about a recession, but market watchers say it’s about to send an even stronger message as the 10-year yield looks set to fall below the 2-year note yield. Various parts of the yield curve have been inverted, but the traditionally watched 2-year to 10-year spread looks set to invert any day now, with the curve at its flattest level in 12 years. Historically, when the 10-Year yield falls below the 2-Year yield, a recession may be the outcome over the next year. While not always the case, it can be a warning signal that volatility and a fall in equities may be coming.

Stocks have had a choppy August with the benchmark S&P 500 down over 3% so far this month. Despite a healthy job market, rising wages, and a strong consumer domestically, geopolitical risks and a global economic slowdown are creeping into the U.S. economy. The 2-10 Yield Curve inversion may be inevitable in the near-term, but the recession outcome can be nixed or pushed out to 2020 if we see economic conditions pick up into the latter half of 2019, which is historically strong.

Information from TDA is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade.

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Posted-In: TD Ameritrade Treasury Yield U.S. TreasuryNews Markets General Best of Benzinga

 

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