The U.S. Treasury yield curve is increasingly pointing to the risk of an approaching recession, with markets clearly doubting the U.S. Federal Reserve’s plan to engineer a “soft landing” for the economy as it hikes interest rates to fight inflation.
“The market seems to be challenging the soft-landing view for the US economy that the Fed argued at the March FOMC meeting”, BofA strategists said in a note to clients on Monday. “The recent 2s10s curve dynamics reflect recession risks, and not just through the curve’s extreme flatness at the inception of the Fed tightening cycle”, said the BofA strategists.
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