Fed's Rate Hike Pause Fails To Dissuade Bond Traders From Betting On A Recession — Here's Why
Portfolio Pulse from Bhavik Nair
Bond traders are increasing bets on a potential US recession despite the Federal Reserve pausing its rate hike campaign. The yield curve inversion has steepened, with the two-year yield reaching 4.8% and the 10-year yield touching a low of 3.77%. The iShares 1-3 Year Treasury Bond ETF (SHY) and Vanguard Short-Term Treasury Index Fund ETF (VGSH) experienced losses.
June 15, 2023 | 3:29 am
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NEGATIVE IMPACT
The iShares 1-3 Year Treasury Bond ETF (SHY) shed 0.06% on Wednesday amid increasing bets on a potential US recession and steepening yield curve inversion.
The increasing bets on a potential US recession and the steepening yield curve inversion have led to a negative impact on the iShares 1-3 Year Treasury Bond ETF (SHY). As the yield curve inversion is considered a precursor to a recession, this has caused a sell-off in short-dated securities, leading to a 0.06% loss for SHY.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 80
NEGATIVE IMPACT
The Vanguard Short-Term Treasury Index Fund ETF (VGSH) lost 0.05% on Wednesday as bond traders increased bets on a potential US recession and the yield curve inversion steepened.
The increasing bets on a potential US recession and the steepening yield curve inversion have led to a negative impact on the Vanguard Short-Term Treasury Index Fund ETF (VGSH). As the yield curve inversion is considered a precursor to a recession, this has caused a sell-off in short-dated securities, leading to a 0.05% loss for VGSH.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 80