- A CNBC article claims that the bond market’s “scary recession warning” has gone away.
- Although the yield curve is no longer inverted, it’s behaving exactly as it would before a major recession.
- New York Fed’s repo operations continued on Thursday with a massive $115.14 billion injection.
U.S. government debt yields extended their steep recovery this week, underpinned by optimism that the United States and China were nearing an interim trade agreement.
With bond yields surging, CNBC reported Thursday that “the scary recession warning everyone was talking about has gone away.” But just because interest rates are rising, it doesn’t mean investors aren’t hedging against recession. As CCN reported last month, U.S. bond yields are behaving exactly as they would before a major economic downturn.
Treasury Yields Stabilize After Massive Surge
After rising as much as 16 basis points on Thursday, the yield on the benchmark 10-year Treasury note stabilized in the final session of the week. The yield reached a session high of 1.96%, slightly below Friday’s peak, before settling at 1.93%, according to CNBC data.
Since approaching all-time lows this summer, the 10-year Treasury yield has recovered almost 50 basis points. | Chart: CNBC
Interest rates have been recovering for the past month as investors tilted back toward risk assets. The Dow, S&P 500 and Nasdaq have all attained record highs over that stretch while gold and bond prices have declined.
Federal Reserve Actions Portend Recession
The Federal Reserve lives on in infamy for never predicting a recession, but its actions in recent months signal that policymakers are already bracing for the worst.