The Globe and Mail reports in its Tuesday, March 26, edition that United States and Canadian benchmark 10-year government bond yields declined again Monday, and the yield curve between three-month Treasury bills and 10-year notes in both countries inverted further.
A Reuters dispatch to The Globe reports that the yield curve in both countries inverted on Friday after disappointing manufacturing data in the U.S. and Germany further raised concerns about the slowing global economy. Meanwhile, Canada reported weak inflation numbers and its third consecutive monthly decline in retail sales.
The 10-year Canada yield, which touched its lowest intraday level since June, 2017, at 1.532 per cent, traded 4.4 points further below the yield on the three-month treasury bill.
In the U.S., the yield curve between three-month notes and 10-year yields was inverted by about five basis points Monday. The inversion, if it persists, is seen as a reliable indicator that a recession is likely in one to two years.
Short-term interest rates are nearly always lower than long-term rates. On the rare occasions when that pattern has inverted over the past 60 years in the U.S., a recession has often followed within a year or two.
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