Several parts of the US Treasury yield curve have reached deeper levels of inversion, a sign that bond investors are increasingly worried about an economic slowdown as the Federal Reserve looks set to raise interest rates further
An inverted yield curve occurs when yields on shorter-dated Treasuries rise above those for longer-term ones, reflecting bets that the central bank will need to cut rates to buoy an economy hurt by higher borrowing costs.
"Keeping rates higher for longer increases the chance that we move into a downturn," said Janet Rilling, a senior portfolio manager and the head of the Plus Fixed Income team at Allspring Global Investments. "So it is a logical reaction from investors that they would then expect, at some point, that the Fed's going to have to be more aggressive in cutting."
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