Jan 29, 2020

U.S. Treasury yield curve inverts again

Dion Rabouin, author of Markets
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Data: Investing.com; Chart: Chris Canipe/Axios

The U.S. Treasury yield curve between 3 months and 10 years inverted on Monday, as it has before every recession in the past 50 years. Inversion has been a false signal just once in that time.

What it means: When yields on short-dated Treasury notes (typically 3-month bills to 2-year notes) climb above longer-dated ones, it signals short-term borrowing costs are more expensive than longer-term loan costs.

  • As Reuters' Dhara Ranasinghe and Sujata Rao note, "Under these circumstances, companies often find it more expensive to fund their operations, and executives tend to temper or shelve investments. Consumer borrowing costs also rise and consumer spending, which accounts for more than two-thirds of U.S. economic activity, slows."
  • "The economy eventually contracts and unemployment rises."

Timing: The yield curve has inverted six to 24 months before every U.S. recession and it typically reverts to normal before the recession comes.

  • It first inverted in March.

Go deeper: The Treasury yield curve has steepened for all the wrong reasons

Go deeper

Updated 13 mins ago - Politics & Policy

George Floyd protests: What you need to know

Photo: David Dee Delgado/Getty Images

Clashes erupted between police and protesters in several major U.S. cities Saturday night as demonstrations over the death of George Floyd and other police-related killings of black men spread across the country.

The big picture: Floyd's death in Minneapolis police custody is the latest reminder of the disparities between black and white communities in the U.S. and comes as African Americans grapple with higher death rates from the coronavirus and higher unemployment from trying to stem its spread.

Massive demonstrations put police response to unrest in the spotlight

Washington State Police use tear gas to disperse a crowd in Seattle during a demonstration protesting the death of George Floyd. Photo: Jason Redmond/AFP via Getty Images

The response of some officers during demonstrations against police brutality in the U.S. has been criticized for being excessive by some officials and Black Lives Matter leaders.

Why it matters: The situation is tense across the U.S., with reports of protesters looting and burning buildings. While some police have responded with restraint and by monitoring the protests, others have used batons, tear gas, rubber bullets and other devices to disperse protesters and, in some cases, journalists.

Updated 2 hours ago - Politics & Policy

U.S. cities crack down on protesters

The scene near the 5th police precinct during a demonstration calling for justice for George Floyd in Minneapolis on Saturday. Photo: Kerem Yucel/AFP via Getty Images

Major U.S. cities have implemented curfews and called on National Guard to mobilize as thousands of demonstrators gather across the nation to continue protesting the death of George Floyd.

The state of play: Hundreds have already been arrested as tensions continue to rise between protesters and local governments. Protesters are setting police cars on fire as freeways remain blocked and windows are shattered, per the Washington Post. Law enforcement officials are using tear gas and rubber bullets to try to disperse crowds and send protesters home.