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1Y-2Y Treasury Yield Curve Inverts Most Since Financial Crisis

Courtesy of ZeroHedge. View original post here.

With the 10Y Treasury yield, fittingly enough, sliding to the lowest level since January, closing Friday trading at 2.6842%, some 55 bps below where it traded less than two months ago when it peaked at 3.2373% on November 8, a more interesting move in TSYs has been observed in the short end where the 1 Year (or 52 Week Bill) closed at 2.590%, up 1.81bps, while the 2Y yield, seen by many as the bond market's estimation of what the Fed will do in 2019, has continued to slide, and on Friday closed 2.8bps lower at 2.4878%, the lowest since the start of June.

As a result, the 1s2s curve has inverted to a whopping -10.8bps.

What the reason is for this bizarre divergence in preference for 2Y paper over 1Y we are not sure, however we will point out that the last time the 1s2s traded almost this negative, when it touched -10.2bps, was in October 2008, just after the government announced  it had bailed out AIG.


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