The benchmark U.S. 10-year Treasury yield ticked up on Monday and the 2-year/10-year yield curve remained inverted, as a lack of major economic news left traders without many clues to act on.
The yield on 10-year Treasury notes was up 3.5 basis points to 2.410% while the 2-year note yield was down 0.8 basis points at 2.424%, leaving the 2-10 curve at -1.6 basis points after earlier brushing against -10 bps.
The small bounce is not “particularly telling from a macro perspective,” but the fact that the inversion remains “speaks to the fundamentals in place behind this move,” according to Ian Lyngen, head of U.S. rates strategy at BMO.
The curve inversion is seen as a harbinger for a recession in the next two years or so, but it also means the market finds credibility in the Federal Reserve’s ability to fight inflation and the tighter monetary policy being outlined won’t have to remain in place for a long time.
Lyngen said the relatively low volume on Monday’s session speaks to a consolidating market, adding that the main event on the week’s schedule is the Fed’s minutes from the most recent meeting, due on Wednesday.
