The yield spread between 2-year and 10-year US Treasury bonds narrows to 17 basis points

According to BIT market data, the yield spread between 2-year and 10-year US Treasury bonds narrowed to 17 basis points last week, the narrowest since early 2025. At present, the 2-year and 10-year yields are about 4.9% and 5.2% respectively, and the market takes into account that the Federal Reserve will raise interest rates by at least three 25 basis points in the next year. Historical statistics show that yield curve inversion has occurred before the past eight US recessions since the 1960s. The KBW Bank Index fell 10% from its recent high last week. Zach Griffiths, head of strategy at CreditSights, said that if the curve were to invert or flatten, it would weaken the market's assessment of the strength of the US economy. Gennadiy Goldberg of TD Securities believes that there is limited room for the short end to continue to outperform the long end significantly.