(Bloomberg) — Defying their stock-market counterparts, Treasury traders aren’t buying Jerome Powell’s upbeat pronouncements on growth. In fact, in the aftermath of Wednesday’s policy decision, one bond-market indicator of economic hardship is flashing red for the first time since the darkest days of the pandemic.
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After the Federal Reserve raised interest rates and signaled hikes at all six remaining meetings this year, a section of the Treasury curve — the gap between five- and 10-year yields — inverted for the first time since March 2020. Meanwhile the flattening trend between two- and 10-year yields continued.
These are time-honored indicators of oncoming growth pains as the inflation-fueling fallout from Russia’s invasion of the Ukraine continues. With officials projecting raising interest rates as high as 2.8% by the end of 2023, bond traders are…
