Off The Charts

Things look great across most financial markets, with everything from stocks to Bitcoin near record highs. That’s not the case in the market often seen as the most steady and sober of them all: government bonds.

There, the gap between yields of longer-term and shorter-term Treasurys is shrinking. It sounds wonky, but such action has historically been a warning signal that the bond market sees potentially tougher economic times ahead. When such movements get extreme enough, they’ve been a somewhat reliable predictor of recessions.

The bond market is not close to that extreme level, to be sure. Market watchers are also split on whether the reasons behind the movements are merely technical and thus easy to dismiss or indicative of something more troubling. Still, they’re sharp enough that they’re worth watching, particularly when other markets seem to be exhibiting such calm.