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Yield Curves Near Inversion

Published Fri, 07 Dec 2018 00:27:03 -0500 on Seeking Alpha

On Tuesday, the front end of the yield curve inverted as 3-year yields rose above 5-year yields. Other front end curves, by that measure, while not there yet, have also begun to dip to cycle lows. The 10-year minus 3-month spread is at its lowest level since 2007. Despite being at a low for the current cycle, the curve remains around 40 bps from inversion.
In the charts below we look at various yield curves over the past 15 years; this time frame allows us to see the curve's movement leading up to the last recession.

Perhaps the most widely followed curve, the 10-year versus the 2-year spread, is also at levels it has not seen since 2007. Although it was picking up slightly Thursday as yields across the board fell, 2s10s was looking much more ominous at only 13 bps away from becoming inverted. This will be the main curve that investors will keep their eyes on; expect to see it ad nauseam in headlines if it moves those 13 bps lower.

Shifting our focus to the longer end of the curve, spreads are off of lows from earlier in the year, but may not have quite bottomed just yet. The 10-year versus the 5-year spread has recently fallen back down towards these lows.

Even longer maturities like the 30-year versus the 10-year have a higher spread still and has much more clearly made a bottom. It is important to note, leading up to the previous recession this curve was not inverted for long. Most of the bottoming occurred with a normal-albeit very... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
VANGUARD EXTENDED DURATION TREASURY ETF 109.16   0.0 0.00 0.00 2.99
SPDR BARCLAYS CAPITAL 1-3 MONTH T-BILL ETF  

VANGUARD EXTENDED DURATION TREASURY ETF - EDV
VANGUARD EXTENDED DURATION TREASURY ETF - EDV  


Older articles featuring Vanguard Extended Duration Treasury Etf (EDV):
What's Going On With The Yield Curve?
Yield Curve Revisited
To Fear Or Not To Fear The Yield Curve
The Inverting Treasury Yield Curve And The S&P 500
The U.S. Yield Curve Inverted. Time To Worry?
Worried About The Yield Curve Inversion?
Why Are Markets Spooked By A Flattening U.S. Treasury Yield Curve?
Is There A Signal In The Noise? Yield Curves, Economic Growth And Stock Prices
Do Eurozone Yields Matter Anymore For Treasuries?
Inverted Yield Curve - Another Blow To Seniors

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