US Treasury yields were mostly higher on Wednesday morning, with investors keeping an eye on the spreads between bonds, after the 5-year and 30-year rates flipped at the start of the week.
The yield on the 5-year Treasury moved up less than a basis points to 2,493% at 7:00 am ET, while the rate on the 30-year Treasury bond added 1 basis points to 2,533%. The yield on the 10-year Treasury note benchmark rose nearly 2 basis points to 2,416%. Yields move inversely to prices and 1 basis point is equal to 0.01%.
The yield on the 5-year Treasury rose above that of the 30-year US government bond on Monday for the first time since 2006, but that inversion faded on Tuesday.
Yield curve inversions have historically occurred prior to recessions, although it is the spread between the 2-year and 10-year that is considered more important by traders. This spread effectively became flat on Tuesday, according to CNBC, while other sources showed the curve briefly inverting.
Antoine Bouvet, senior rates strategist at ING, told CNBC’s “Squawk Box Europe” on Wednesday that he didn’t think the moves in the yield curve indicated that “recession is inevitable, fortunately.”
“But clearly there’s a risk and that risk is increasing when you take into account the Fed committing almost to raise rates to restrictive territory, at a time when some quarters of the economy are showing signs of slowing down and clearly that is something that needs to ok [on] investors’ minds,” he said.
On Wednesday morning, the 2-year Treasury yield was slightly lower while the 10-year rose, easing concerns about an investment.
The Russia-Ukraine war has been driving already rising inflation higher, which investors are concerned could weigh on economic growth.
Sentiment was boosted on Tuesday following negotiations between Russia and Ukraine officials in Turkey, at which Russia’s deputy defense minister claimed Moscow had decided to “drastically” cut back its military activity near Ukraine’s capital.
Russia had begun to move some of its troops away from the city of Kyiv to elsewhere in Ukraine, but Pentagon Press Secretary John Kirby warned on Tuesday that these movements do not amount to a retreat.
In addition to monitoring developments in this geopolitical crisis, economic data updates also remain in focus for investors.
Payroll services firm ADP is due to release its March employment change report at 8:15 am ET on Wednesday.
The final fourth-quarter reading of US gross domestic product is set to be released at 8:30 am ET.
An auction is scheduled to be held on Wednesday for $30 billion of 119-day bills.
— CNBC’s Jesse Pound and Holly Ellyatt contributed to this market report.