National + Finance | August 30, 2018

Treasury Yield Spreads Flatten, But No Downturn Yet

Although the difference in yields between shorter-dated and longer-dated Treasury bonds has grown narrower this year, theoretically portending a recession, Federal Reserve Bank of San Francisco economists don’t see imminent risk of a downturn.

In a research paper, the San Francisco Fed’s Michael Bauer and Thomas Mertens note that the yield curve is not yet inverted. Specifically, they note that the 10-year/three-month spread between Treasury rates is “nearly one percentage point away from an inversion.” Moreover, Bauer and Mertens urge “great caution… in interpreting the predictive evidence.”

Yet, some Fed officials are wary over the prospect of a yield curve inversion. Atlanta Fed president Raphael Bostic said in a TV interview that “I’m going to be very sensitive” to what the market is doing, as he weighs the prospect of further short-term interest rate hikes. Bostic was interviewed at the Kansas City Fed’s annual research conference in Jackson Hole, WY.

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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

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