Capital Economics senior markets economist James Reilly said in a note the 2- to
10-year US Treasury yield spread is expected to narrow further over the coming
months and could invert. He warned escalating tensions in the Strait of Hormuz
could trigger a full inversion. Reilly said a jump in 2-year real yields has
driven by the recent flattening and, as lift investors rate expectations, the curve
should continue to flatten in the near term.
