The U.S. curve has inverted before each recession | 02 11月 2022

02 11月 2022, USD/JPY

The U.S. curve has inverted before each recession

USDJPY trading plan:

The U.S. Treasury finances federal government budget obligations by issuing various forms of debt. The $24 trillion Treasury market includes bills that mature in one month to one year, two- to 10-year notes, and 20- and 30-year bonds. A flattening curve can mean investors expect near-term rate hikes and are pessimistic about economic growth further ahead. The curve plotting yields of three-month bills against those of 10-year notes, which had already inverted in intraday trading in July, has turned negative late last month, closing inverted for the first time since early 2020. That negative yield spread stood at -12 basis points on Tuesday. The inversions suggest that while traders expect higher short-term rates, they may be growing nervous about the Fed’s ability to control inflation without significantly hurting growth. The Fed has already raised rates by 300 basis points this year.

Investment idea: sell 148.00 and take profit 147.20.

David Johnson
Analyst of «FreshForex» company
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