The inversion | 27 October 2022

27 October 2022, USD/JPY

USDJPY trading plan:

A classic recession warning is flashing in the US Treasury market, where the 10-year note’s yield fell below the three-month bill’s, a rare occurrence that signals investors anticipate dire economic consequences of the Federal Reserve’s campaign against inflation. The 10-year dipped as much as 0.08 percentage point below the three-month, after brief and smaller inversions Tuesday and in early August. Inversions of this segment of the Treasury curve typically occur late in Fed tightening cycles as three-month bills track the policy rate while longer-term borrowing costs reflect expectations for economic growth and inflation. While other widely-watched yield curve segments such as the two- to 10-year and five- to 30-year have been deeply inverted for much of this year, the Fed follows this one more closely.

Investment idea: range 145.00 -146.00.

David Johnson
Analyst of «FreshForex» company
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