"..It's possible that the tariff-and-currency war of 2018 slows things down enough that the Fed pauses, stops bumping up the short end or that Treasury issuance is large enough to drive the long end higher but for right now, this is where we're at..."
I know we've gotten a bit obsessive with the whole "the yield curve does not matter" but it is important. The recession chatter is early, if not flat wrong.
We'll have some ideas if and when the curve matters for equities and the economy but right now there are more pressing concers.
10Y Treasury Yield Tops 3.00% After Surprise Supply Increase
As we noted here, the Treasury announced it would raise the amount of long-term debt it sells to $78 billion this quarter, up from $73 billion last quarter, while launching a new two-month bill.
The surprise is that whereas consensus had expected 5-year auctions to increase by $1 billion in the quarter, the Treasury will now increase the auction amount by $1bn every month in the quarter, for a total of $3 billion, which in turn will put extra pressure on the belly of the curve.
And that extra supply has prompted weakness across the Treasury curve, pushing 10Y Yields back above 3.00% for the first time since The Fed hiked rates in June..
And the yield curve is steepening...
All of this ahead of The Fed this afternoon.Sorry about the "prophesy" bit, I think I was channeling the guy in 2011's "Peak Oil Stalwart to Shutter Forum/News Site, Persue Career as Astrologer"