The yield curve is said to be inverted when the 2-year bond offers a higher rate than the 10-year bond. On Wednesday, the inversion of the US 2/10-year yield curve accelerated to 24.20 basis points, the largest inversion in nearly 22 years, according to Refinitiv data.
Yield curve inversions are widely seen as harbingers of recessions.
US Treasury yields also fell from five-year notes to 30-year bonds, underperforming the front of the curve.
“The tricky situation is that the Fed is being forced to react to these strong inflation data to prevent inflation expectations from going too high,” said Brian Smedley, chief economist and head of investment and macro research at Guggenheim Partners.
The Labor Department report showed that the US consumer price index (CPI) rose 9.1% in June, the biggest increase in more than four decades. In monthly terms, the increase in the general IPC was 1.3%.
The so-called “core” CPI, which excludes volatile food and energy prices, rose 5.9% year-on-year.
