Treasury yield curve inverts as recession fears accelerate

US Treasury yields tumbled on Tuesday on what is widely seen as a recession alert and a key part of the yield curve inverted for the first time in three weeks as concerns about economic growth injured risk appetite, bringing about increased demand for the safe haven US debt.

Fears of recession and elevated prices caused Treasury yields to nosedive, inverting the US 2s-10s yield curve, one of the most popular indicators of a recession, sitting at -0.006% amid a hopeless market sentiment as reflected by US equities registering losses between 0.28% and 0.91%.

The US 2-year Treasury bill rate sits at 2.822%, six basis points higher than the US 10-year Treasury note, which yields 2.816%.

The US inflation is still stubborn at around 8.6%, showing almost no sign of easing, while Fed decided rate hikes by 150 bps since March 2022. The US Q1 final GDP dropped by -1.6%, while also showing that consumer spending has softened and inventories remained higher than reported in May.