Bond investors pushed down the yield on short-term Treasuries more than longer-term bonds, causing the yield curve to uninvert for the first time in years.
The yield on two-year Treasuries fell by 0.107 percent on Wednesday morning, to 3.781 percent. The yield on 10-year Treasuries fell by 0.53 percent to 3.791.
This means that the longer-term yields were above short-term yields, a relationship considered normal in the bond market where investors typically require more yield to holding longer term bonds.
Since the summer of 2022, however, the yield curve had been inverted, with higher yields on the short end of the curve. An inverted yield curve was long considered a reliable sign that a recession is looming because it indicates that investors expect a rate cut in the future. The prolonged yield curve inversion without a recession was highly unusual.
The un-inversion does not mean the economy is safe from a recession, however. Often in the past, the curve un-inverts just before a recession.
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