© Archyde.com/Andrew Kelly
File image of a detail of the facade of the US Treasury Department building in Washington, DC
NEW YORK, April 4 (Archyde.com) – Benchmark 10-year U.S. Treasury yields rose slightly on Monday and the two-year to 10-year yield curve remained inverted as a lack of major economic news left traders with little clue how to act.
* The 10-year note yield rose 3.5 basis points to 2.410%, while the 2-year debt yield fell 0.8 basis points to 2.424%, leaving the 2/10 curve at -1.6 points. basis following having previously touched -10 basis points.
* The small rebound is not “particularly revealing from a macro perspective”, but the fact that the inversion is holding “speaks to the fundamentals behind this move”, according to Ian Lyngen, head of US rates strategy at BMO.
* The inversion of the curve is seen as a harbinger of a recession in the next two years, although it also means that the market believes in the Fed’s ability to fight inflation and that tighter monetary policy will not have to remain in place for a long time.
* Lyngen said the relatively low volume in Monday’s session speaks to a consolidating market, adding that the main event on the week’s schedule is the minutes from the Fed’s most recent meeting, scheduled for Wednesday.
* The breakeven rate on five-year Treasury Inflation-Protected Securities (TIPS) stood at 3.226%, following closing at 3.238% on Friday. The 10-year TIPS breakeven rate was 2.807%.
* The US dollar 5-year inflation-linked forward swap, seen by some as a better indicator of inflation expectations due to possible distortions caused by Fed quantitative easing, was trading at 2.549%.
(Reporting by Rodrigo Campos, Edited in Spanish by Manuel Farías)
