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Yield curve on 5-30 year US bonds inverts for first time since 2006

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By Dhara Ranasinghe

LONDON, March 28 (Reuters) – The U.S. Treasury yield curve, as measured by the gap between the return on five-year and 30-year notes, inverted on Monday for the first time since early 2006, ahead of the resumption of settlement in the market.

* While parts of the curve – specifically the 5-10-year and 3-10-year curves – inverted last week, the drop into negative territory for the brĂ¼cha between the 5-year and 30-year maturities of the largest market in World bonds have raised concerns that the Federal Reserve’s aggressive approach to tackling inflation will hurt the.

* “That’s exactly what the bond market is pricing in: that the Fed’s policy response is going to curb economic growth sharply,” said Peter Chatwell of Mizuho Bank in London.

* The spread between 30-year and five-year bond yields fell to -7 basis points (bps), dipping below zero for the first time since February 2006, according to Refinitiv data. The differential has collapsed from the positive 53 basis points at the beginning of the month.

* The two-year note yield, which is sensitive to interest rate expectations, rose as much as 2.41%, its highest since early 2019, and by 1048 GMT it was up 6 basis points to 2.35. %.

* The return on ten-year paper advances to 2.55%, reaching its highest since April 2019, but later improved one basis point to 2.49%.

* The break between the daily and 10-year return fell to around -12 basis points, moving more into inverted territory.

(Reports added to Yoruk Bahceli; edited in Spanish by Carlos Serrano)

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