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8/14, 12:11 PM (Source: TeleTrader)
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US Treasury yield curve inverts in key section

A widely accepted recession signal was flashed on Wednesday for the first time since 2007 in the market for sovereign bonds in the United States. Prices of securities issued by the Department of the Treasury jumped, sending yields sharply lower, where the spread between the rates on notes due in ten and two years briefly turned negative. The phenomenon preceded all recessions in the past six decades. Minutes before, the same spread touched zero for the United Kingdom's gilts. German Bund yields were piercing new all-time lows after statistical data showed the country's economy contracted 0.1% in the second quarter, which was the second time in a year.

The two-year yield was 4.1 basis points lower at 6:05 am CET, reaching 1.632%. The ten-year rate fell by a stunning 6.9 points to 1.635%. The yield on the 30-year bonds slumped 8.9 points to 2.072%, a record low. Corresponding futures prices advanced 0.06%, 0.34% and 0.89%, respectively.

The curve has inverted in several closely tracked parts in the past year, of which the difference between the three-month and ten-month rates is the most widely cited. The former was unchanged for the day at 1.998%, translating to a negative spread of 36.3 points.

The British yields for two-year maturities were just 0.4 points lower at 0.459%. The ten-year gauge declined 3.1% to 0.468% compared to the fall by a stunning 6.2 points to 1.083% for the 30-year bonds.

Breaking the News / IT