Checking In On The 2/10 Spread

I like to take an occasional look at the spread between the two- and ten-year Treasuries. Over the last 35 years, negative 2/10 spreads have often preceded recessions. It’s not perfect, but the spread’s track record is better than a lot of economists’ track records.

Thanks to the Fed’s latest rate hike, the spread is down to about 80 points. It’s very close to a 10-year low.

We’re not in the danger zone just yet, but we’re getting closer. The futures market thinks the Fed will hold off doing anything for a few months. They currently see a 50-50 chance of another rate hike in December.

Posted by on June 26th, 2017 at 12:43 pm


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