Volatile Bond Markets Reflect Uncertainty Around Fed Rate Hikes and Recession Signals
-
Wall Street's recession signal, the inverted yield curve, is the most volatile since the Volcker era in the 1980s.
-
The yield curve inverts when short-term rates exceed long-term rates, signaling a likely recession ahead.
-
Extreme yield curve volatility lately reflects bond traders reacting to mixed Fed signals on rates and the economy.
-
October's stock selloff coincided with the 10-year Treasury yield nearing 5%, before easing in November with stocks rebounding.
-
Tuesday's CPI report may further calm markets if inflation cools, reducing pressure for more aggressive Fed rate hikes.