Government bonds' spread between long, medium, and short maturity in the U.S. 2024

As of November 1, 2024, the U.S. bond market displayed a positive spread of 10.8 basis points between 10-year and 2-year yields, indicating long-term rates above short-term ones. The 5-year versus 2-year spread showed a negative 2 basis points, while the 2-year versus 1-year spread is lower at -9.5 basis points, suggesting an inverted yield curve in shorter maturities.

The negative spreads in the U.S. bond market, particularly the -2 basis points between 5-year and 2-year yields and -9.5 basis points between 2-year and 1-year yields, indicate a partially inverted yield curve. This often signals investor pessimism about short-term economic prospects, as investors seek the relative safety of long-term bonds, pushing those yields down relative to shorter-term bonds. An inverted yield curve is typically interpreted as a potential indicator of economic slowdown or recession, as it reflects expectations of lower interest rates in the future to stimulate the economy.