U.S. Treasury yield curve | 16 February 2022

16 February 2022, GBP/USD

U.S. Treasury yield curve

GBPUSD trading plan:

A dramatic flattening in key parts of the U.S. Treasury yield curve is reflecting worries that the Federal Reserve has been too slow to raise interest rates and will now risk be causing a recession by tightening monetary policy too aggressively. The gap between yields on two-year and 10-year U.S. government debt is the smallest since July 2020. Traders watch the yield curve for insight into the U.S. economy. An inverted curve, where rates on short-term government debt exceed those on longer-term debt, has reliably predicted past recessions. In this case, traders believe the flattening yield curve reflects worries that the Fed has already let inflation get out of control by being slow off the mark in raising interest rates and risks hurting growth as it hurries to catch up.

Investment idea: buy 1.3533 and take profit 1.3600.

David Johnson
Analyst of «FreshForex» company
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