The difference between the US 10 and 5 year yield is down to just 20bps. The market is reflecting short-term growth and short-term Fed tightening, but sees inflation firmly anchored at 2% for the long-term. The fact that inflation is at 2% also keeps equity valuations up, but for how long?
As the curve flattens to 2006 levels, are we 12-18 months away from an inversion and possible recession?