NEW YORK (dpa-AFX) – The futures contract for ten-year US government bonds (T-Note future) rose on Tuesday after initial price losses. It recently rose by 0.45 percent to 122.27 points. The yield on ten-year government bonds also fell to 2.40 percent after rising to its highest level since May 2019 at 2.55 percent the previous day.
In addition, for the first time since 2019, the yield on two-year bonds on the bond market exceeded that of ten-year bonds at 2.48 percent. This reinforces the market’s view that interest rate hikes by the US Federal Reserve could potentially cause a recession. The yield ratio reversal occurred as two-year yields rose while 10-year yields fell, crossing at about 2.39 percent.
That short-term returns are higher than long-term returns is an anomalous occurrence. It signals that high levels of short-term yields may not be sustainable as growth slows. The reversal in 2-10 year bonds is the latest in a series that began in October when 20-year bond yields outperformed 30-year bonds./ck/he