2Y-10Y yields have inverted in our present times. 2yr yields are in an aggressive uptrend still .3~% higher than the 10 yr yields (inversion). This makes more sense than people understand on the surface. 10Y yields are pricing in rate cuts (because these are 10 year forecasted investments). Funny thing is it's not usually until a few months to even a year after rates re-vert to the norm does a recession hit.
2yr yields are almost guaranteed to slam into 4.5% here within the next 6 months because we have information indicating we could be targeting into the 4.5% from the fed. Markets just 'casually' pricing this in. If your not first your last. A surprise would be end of year getting new information and seeing how much we've extended.
Some assumptions we can make based on the trajectory not even charting out anything else, is that the current range low is likely to be contested, taken and if we drop once more with a decent extension can just load longs likely for a while since the next events would be 2yr yields need to pull back under the 10, markets will likely stabilize for 6+ months and yield inversion will cease, then we get another recession.
What are your guys thoughts on this?
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