The Treasury market's outlook has turned grim, based on the inverted yield curve of late. Another dimension of the cautious outlook is yesterday's sharp drop in the implied inflation outlook, based on yield spreads for nominal less inflation-indexed Treasury rates.
Let's start with the yield curve, which is inverted for the 10-year maturity vs. short rates ranging from 1 month up to 1 year.
"The market is obviously telling you that it's quite worried about some of the incoming data, including the PMIs this morning, the ongoing trade rhetoric and the move in risk assets,"