The 10-year benchmark US Treasury (US10Y) closed today at 3.113%. After closing out August at 2.861%, we saw the US10Y steadily rise above 3.23% by the end of September. The continual rise ended there and has since oscillated between 3.00-3.25%. The Brexit rollercoaster has continued to have a negative effect on the US market, however, news that another round of trade tariffs being placed on Chinese imports is being put on hold with the two sides beginning to talk has improved investor sentiment. A USTR spokesperson has since denied the report from the Financial Times that China and the US have begun to speak on the matter. Investors didn’t react to the denial.
Analysts expect the US10Y to continue its oscillation but ultimately close out 2018 without much change. The flattening yield curve continues to be a concern and worthy of keeping an eye on. A flattening curve that has the potential to invert, where the 2-year rises above the 10-year, is a red flag that a recession is imminent.