In the Treasury market, shorter-term interest rates this week started to move above some longer-term rates. Monday (12/3) the 3-yr. Treasury yield moved above the 5-yr. yield, and it was soon followed by the 2-yr. yield. This is the first time yields have inverted since 2007. That kind of bond market move may indicate that some of the more widely watched spreads could soon flip – an early warning sign of a recession. US Stocks plunged with the Dow Jones Industrial Average tumbling more than 800 points. As the yield curve continued to flatten, financial shares were hammered and investors bailed on bank stocks. Investors worried about the bond-market signaling a possible economic slowdown and that the Treasury events may hurt lending margins.
Links to this month’s rates:
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