The US Treasury 10Y-2Y yield curve steepened after Biden’s inauguration as President, a sign of economic optimism. Then reality began to dawn when inflation began to surge (blue line). Then The Fed stepped in to combat inflation by signaling an increase in their target rate (green line). The result? The 10Y-2Y Treasury curve is inverted at -4.85 BPS, generally an indicator of an impending recession.
But never fear! The Feral Reserve is expected to reverse its rate increases by March 2023.
So, it looks like The Fed will be returning to its “low rider” rate policies in early 2023.
In other words, hold on, The Fed is coming. Again.