Unstable Behavior in US Bond Markets Points to Deep Recession, Elevated Sovereign Risk: “Investors Are Running out of Havens”
Long-term yields on U.S. This year, the performance of Treasury bonds has been unpredictable, and this week, the 10-year Treasury yield crossed 3.5% for the first time in ten years. The 10-year note hit 3.642% after the Fed increased interest rates by 75bps (basis points), and the two-year Treasury note reached 4.090%, a 15-year high. Bond dealers have reportedly been “confronted with the wildest volatility of their careers,” according to recent sources, and the curve between the two- and 10-year notes implies that the likelihood of a severe U.S. recession has increased.