Rates moved up this past shortened week, especially in Canada more so than in the USA. Conversely, the “spread”between the 10-year and the 2-year rates widened quite a bit in the USA (at 0.19x) but stayed flat in Canada(at 0.14x). The U.S. 10/2 spread is now back to the higher end of its recent range.
Our “recession barometer” kicks in when the“spread” between the 10-year rate and the 2-year rate for Treasuries in the USA and Government of Canada Bonds in Canada reaches 0.00x, which means that the yield on the 10s equals the yield on the 2s. If the 10s yield less than the 2s, an “inversion” occurs and then it is likely that a recession will soon follow.
You can access this week’s report on the spread of the 10-year/2-year yield curve here … … RB_041819
