Interest Rate Update – August 2018

The 10-year benchmark US Treasury (US10Y) closed today at 2.858%. Steady continues to be the trend for 2018 with a .02% adjustment over the past 30 days. Analysts don’t expect to see much change in the US10Y to close out Q3 of 2018 and many believe it will also remain steady through Q4 of 2018. However, there does seem to be concern about the flattening yield curve as the 2-year yield is closing the gap on the 10-year. A flattening curve that has the potential to invert, where the 2-year rises above the 10-year, is a red flag that a recession is imminent. Not everyone is concerned, Treasury Secretary Steven Mnuchin commented while on CNBC’s Squawk Box, “I, for one, am not at all concerned about the yield curve. I don’t think that’s a predictor of economic growth, I think it’s a market condition, and for now having a flat yield curve with us issuing long-term debt is something we’re perfectly content with.”