At 10:15 a.m., the rate on US Treasury bonds for the five-year loan rose to 2.643%. It was therefore higher than that for Treasury bonds with a 30-year maturity, which progressed much less strongly to 2.595%.
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The rate of the American 5-year loan rose above that of 30 years in the United States on Monday, a first since 2006, a sign of the pressure of inflation on the American economy and the fear of an economic recession by investors.
At 10:15 a.m., the rate on US Treasury bonds for the five-year loan rose to 2.643%. It was therefore higher than that for Treasury bonds with a 30-year maturity, which progressed much less strongly to 2.595%.
The three-year rate (2.630%) also became higher than the thirty-year rate.
This is the first time since 2006 that this situation has occurred.
This goes against ordinary financial logic: in normal times, the shorter an investment, the lower the return. Conversely, the longer the money invested is blocked for a long period, the more the interest rate must compensate for the risks of the long-term investment.
The yield curve, which represents the interest rates according to the different maturities, is therefore normally rising. In the present case where the short rates become higher than the long rates, the curve is said to be inverted, a sign that the market judges that the economic risk is increasing in the short term.
“The yield curve is traditionally seen as a leading indicator of the economic cycle. An inversion of the curve suggests a recession, even if that does not always occur,” Nordine Naam, an analyst at Natixis, told AFP.
Short-term rates traditionally move in tandem with the monetary policy of the American Central Bank (Fed). However, the latter has embarked on the path of a series of increases in its key rates, so as to contain inflation at its highest level in 40 years.
Investors anticipate an acceleration of this movement. During his last speech, on March 21, Fed Chairman Jerome Powell showed his determination and said he was ready to “act more aggressively”.
Raising key rates pushes commercial banks to offer higher interest rates for the loans they grant to their customers, individuals and States, which slows down economic activity.
But Jerome Powell has also shown his assurance that the US economy, “very, very solid”, can cash in on rate hikes.
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