Source: US Dept. of Treasury End of Day
• The two-year Treasury note yield increased five basis points last week to a yield of 1.68%, which was well off the October low of 1.39%. The much-watched 3 month Treasury bill to 10 year Treasury note spread is now positive and indicates a possible pause in this year’s decline in rates.
• The global slowdown that has been a serious drag on U.S. manufacturing activity is continuing apace. The latest reports depict a eurozone that virtually stagnated in the third quarter and remained in the doldrums in early October, with Germany, the region’s powerhouse, mired in an industrial recession.
• While recession fears have risen in recent months, it’s unlikely that this dire scenario will unfold, barring a sudden external shock such as an oil crisis or major geopolitical conflict. Importantly, a key recession buffer is firmly in place, namely a central bank that is highly tuned into the global risks facing the economy.
