A major Treasury yield curve inversion narrowed on Friday, after hitting 2000. fastest level since last day.
Yield-curve inversion, or when shorter-term government bonds have higher yields than longer-term ones, is often seen by markets as a sign that a recession is coming.
But the gap between 2-year and 10-year yields narrowed on Friday as traders weighed the possibility that the US Federal Reserve would hike interest rates by 75 basis points, not 100 basis points, at its next meeting.
At 2 a.m. ET, the 2-year yield (which is more sensitive to changes in monetary policy) slipped 3 basis points to about 3.1138%. Yield on Benchmark 10 year treasury note fell only 1 basis point to 2.9447%
Meanwhile, yield 30 Year Treasury Bond The business was trading slightly higher around 3.1049%. Yields move inversely to prices, and one basis point equals 0.01%.
Federal Reserve Governor Christopher Waller said on Thursday that he Supports an increase of 75 basis points At the next meeting of the central bank to be held on 26-27 July. However, he said he would be looking at the data and was ready for a bigger move if he felt it was needed.
This comes as a growing number of analysts were saying a 100 basis point increase be on the table, after inflation kept rising more than expected.
Investors are also digesting some of the bank’s disappointing earnings since Thursday. JPMorgan Chase said it has built up reserves for bad debts, and suspended share buybacks, while Morgan Stanley Reported Weaker Than Expected Investment banking revenue.
More major bank results expected from Friday Wells Fargo And Citigroup,
On the economic front, June retail sales, along with import and export prices, are due Friday at 8:30 a.m. ET.
The June industrial production report is expected at 9:15 a.m. ET and preliminary July data for consumer sentiment is at 10 a.m. ET.
— CNBC’s Sarah Minn and Jeff Cox contributed to this report.