The yield curves on the 2-year Treasury and 10-year Treasury briefly normalized Monday morning, with the spreads turning positive, before re-inverting.
Yields briefly rebounded on Monday before inching lower again, after fresh economic data showed the U.S. services sector grew at a faster-than-expected pace in July. The ISM services index recorded a 51.4% reading for the month, representing the share of purchase managers reporting expansion. That is up from 48.8% in June and better than the Dow Jones estimate for 50.9%.
The services index offered some positive economic news to counter fears of a looming recession on the back of weak economic numbers last week.
On Friday, July’s nonfarm payrolls report showed that job growth for the month totaled just 114,000, which was below the 185,000 Dow Jones estimate as well as June’s revised figure of 179,000. The jobs report also showed that the unemployment rate unexpectedly rose to 4.3%, its highest level since October 2021.
The data suggested an easing of the labor market, which prompted concerns about a recession. That came after the Fed earlier in the week left interest rates unchanged and hinted at a September rate cut. But many investors have since questioned whether the central bank should have moved to cut rates already to ward off an economic downturn.
https://www.cnbc.com/2024/08/05/us-treasurys-recession-concerns-take-hold-.html
What a Legendary Wall Street Prognosticator Thinks Is in Store for the U.S. Economy
A financial expert and market analyst predicts that the Federal Reserve will be compelled to implement an emergency rate cut before its scheduled September meeting to mitigate the recent significant sell-off in equities. Robert Prechter, founder and president of Elliott Wave International, conveyed his concerns during an interview with Neil Cavuto on Fox Business, suggesting that the Federal Reserve missed a crucial opportunity at its previous meeting to address the ongoing market turmoil.
Prechter expressed his belief that an emergency rate cut is imminent due to the rapid decline in rates. The last time the Fed made such a move was during the early stages of the COVID-19 pandemic. However, many experts argue that another emergency cut could signal that the US economy is in dire straits, potentially exacerbating market anxieties.