The U.S. government bond market sounded alarms Wednesday as investors fleeing riskier assets drove the 30-year bond's yield to a record low and the 10-year yield fell below the rate on the two-year for the first time since 2007.
The 10-year Treasury yield dipped as much as 1.9 basis points below the two-year yield in what's considered a harbinger of a U.S. economic recession beginning in the next 18 months. That expectation, nurtured in recent weeks by worsening U.S.-China trade relations and signs global growth is slowing, was bolstered Wednesday by weak Chinese and German economic data. The so-called inversion drew U.S. President Donald Trump's ire, who tweeted Wednesday that Federal Reserve Chairman Jerome Powell is "clueless."
Bad European and Chinese data were the trigger for the global bond rally, said Praveen Korapaty, chief global rates strategist at Goldman Sachs Group Inc. "From the pace of the move, I suspect some long-held steepeners are being unwound as well."