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 the recent flattening and, as investors lift rate expectations, the curve should continue to flatten in the near term.

2026-07-21

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 the recent flattening and, as investors lift rate expectations, the curve should continue to flatten in the near term.