The positive inflow of economic data in recent weeks has fostered prospects of a ‘no landing’ scenario where the economy would continue to fly high without experiencing a recession or slowdown.
The nation’s hiring has chugged of late, with the Labor Department reporting that employers added a robust 517,000 jobs in January, which is more than 2.7 times increase than market expectations. Also, the unemployment rate decreased to a 53-year low of 3.4%, depicting strong labor market resilience.
However, yields have climbed more quickly on short-term Treasury than on longer-term bonds, indicating a red flag that a recession is looming. Last week the yield on the 10-year Treasury dropped more than 0.85 percentage points below the two-year yield, making the most inverted curve since 1981.
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