[The U.S. 2-Year and 10-Year Treasury Yield Spread Narrows to 17 Basis Points, Approaching Inversion, Seen Before the Last 8 Recessions] BlockBeats News, September 28: According to BIT (bit.com) market data, the yield spread between the 2-year and 10-year U.S. Treasury bonds narrowed to 17 basis points last week, the narrowest since early 2025. Currently, the 2-year and 10-year yields are approximately 4.9% and 5.2%, respectively, with the 10-year yield still near its highest level since 2007. However, as the market anticipates further rate hikes by the Federal Reserve, short-term yields are rising faster, pushing the spread closer to inversion. The market is currently pricing in at least three 25-basis-point rate hikes by the Federal Reserve over the next year. Previously, the rise in long-term yields primarily reflected economic resilience, inflationary pressures, and fiscal risks. However, after the Federal Reserve implemented its first rate hike in three years this September, the market has increasingly focused on whether policy rates have risen high enough to suppress future growth. Historical data shows that since the 1960s, yield curve inversions have preceded the last 8 U.S. recessions, with the 2-year and 10-year spread inverting an average of about 15 months before a recession, ranging from 6 months to 2 years. However, the inversion in 2022 did not lead to a recession. The flattening of the U.S. Treasury yield curve has already impacted bank stocks, with the KBW Bank Index entering a technical correction zone last week, down 10% from its recent peak. CreditSights strategy chief Zach Griffiths stated that if the curve further inverts or flattens significantly, it will weaken the market's perception that "the U.S. economy is very strong." TD Securities' Gennadiy Goldberg believes the market has already priced in a significant amount of rate hike expectations, leaving limited room for the short end to continue significantly outperforming the long end, and the curve may steepen again in the future. The 17-basis-point spread more directly reflects the market's reassessment of the risk of overly tight policy rather than signaling that a recession is inevitable. [Original Link]