NEW YORK/LONDON ¨C The U.S. government bond market sounded alarms Wednesday as investors fleeing riskier assets drove the 30-year bond¡¯s yield to a record low and the 10-year yield fell below the rate on the two-year for the first time since 2007.
The 10-year Treasury yield dipped as much as 1.9 basis points below the two-year yield in what¡¯s considered a harbinger of a U.S. economic recession beginning in the next 18 months. That expectation, nurtured in recent weeks by worsening U.S.-China trade relations and signs global growth is slowing, was bolstered Wednesday by weak Chinese and German economic data. The so-called inversion drew U.S. President Donald Trump¡¯s ire, who tweeted Wednesday that Federal Reserve Chairman Jerome Powell is ¡°clueless.¡±
Bad European and Chinese data were the trigger for the global bond rally, said Praveen Korapaty, chief global rates strategist at Goldman Sachs Group Inc. ¡°From the pace of the move, I suspect some long-held steepeners are being unwound as well.¡±
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