1029 ET - The yield curve has flattened substantially in the past month, a sign traders may be growing more concerned that the Fed's two goals are increasingly at odds. The 10-year Treasury yield is now trading about 43 basis points above the 2-year yield. That is down from about 75 basis points in mid-February and one of the smallest spreads since last spring. An inverted yield curve--a negative 2s-10s spread--is Wall Street's classic harbinger of a coming recession. We're not there yet. But the flattening seen in recent weeks accelerated sharply after Wednesday's Fed meeting. It's evidence that traders increasingly believe that inflation will limit Fed's bandwidth to respond to economic fragility by cutting rates--which could come at the expense of future growth. (matt.grossman@wsj.com; @mattgrossman)

(END) Dow Jones Newswires

March 19, 2026 10:29 ET (14:29 GMT)

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