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Takeaway: A closer look at the 10s/2s yield spread provides an unequivocally bearish signal on U.S. growth.

The Most Obvious U.S. #GrowthSlowing Indicator? - growth cartoon 10.08.2014

need convincing of our U.S. #growthslowing call?

Look at the yield spread compression of the 10-year Treasury versus the 2-year Treasury yield spread. Here's analysis via Hedgeye CEO Keith McCullough in a note sent to subscribers earlier today:


"Most things macro (last week) queued off of what I think was another head-fake in rate hike risk; UST 10yr Yield +15 bps w/w was a counter TREND move to 1.90% which has since pulled all the way back to 1.82% this am, flattening the Yield Spread to yet another YTD low of +94bps wide (10s/2s), which is an explicitly bearish GDP growth signal."


Click image to enlarge 

The Most Obvious U.S. #GrowthSlowing Indicator? - 10y2y treasury

Just an FYI, this spread has compressed to levels not seen since 2007.

Still don't believe U.S. Growth is Slowing?