The U.S. Treasury yield curve inverted | 30 March 2022

30 March 2022, GBP/USD

The U.S. Treasury yield curve inverted

GBPUSD trading plan:

The U.S. Treasury yield curve inverted on Tuesday for the first time since 2019, as investors priced in an aggressive rate-hiking plan by the Federal Reserve as it attempts to bring inflation down from 40-year highs. Typically, the curve slopes upwards because investors expect more compensation for taking on the risk that rising inflation will lower the expected return from owning longer-dated bonds. That means a 10-year note typically yields more than a two-year note because it has a longer duration. Yields move inversely to prices. A steepening curve typically signals expectations of stronger economic activity, higher inflation, and higher interest rates. A flattening curve can mean the opposite: investors expect rate hikes in the near term and have lost confidence in the economy's growth outlook.

Investment idea: sell 1.3153 and take profit 1.3085.

David Johnson
Analyst of «FreshForex» company
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