The compression of US 10 year bond yields is holding the attention of many investors - and with good reason

James Marlay

Livewire Markets

The compression of US 10 year bond yields is holding the attention of many investors - and with good reason. With expectations that the US Fed will look to raise rates this year investors are wary of the prospect of an inverted yield curve. The yield curve is inverted when short-term interest rates (e.g. the 3-year Treasury) are higher than long-term interest rates (e.g. the 10-year Treasury yield). LPL Financial's Jeffrey Kleintop provides this insight, The yield curve inverted just prior to every US recession in the past 50 years. That is seven out of seven times - a perfect forecasting track record. The yield curve inversion usually takes place about 12 months before the start of the recession, but the lead time ranges from about 5 to 16 months. With US 10 year bonds below 2% it won't take much of a movement upwards at the short end to give markets the wobbles. Quote and Chart via Business Insider: (VIEW LINK)


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James Marlay
Co Founder
Livewire Markets

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