Aug. 29 (UPI) — Stocks rose on Wednesday, despite the 30-year Treasury bond hitting a new all-time low as traders continue to bet on slow growth and mild inflation in the United States.
The 30-year bond yield hit 1.907 percent early Wednesday morning, below the previous record of 1.916 percent earlier this month. The rate leveled off later in the morning but still sits below shorter-term debts, which causes the U.S. yield curve to invert.
The yield curve first inverted earlier this month but the situation worsened on Tuesday and again on Wednesday.
“The key chart investors’ eyes are glued to is the spread between the 2-year Treasury yield and the 10-year note, which is accelerating its inversion to the lowest levels since the financial crisis,” senior market analyst for OANDA Edward Moya wrote.
The bad economic news sent U.S. stock indexes tanking Tuesday afternoon despite Monday’s rally, but stocks closed the day with gains on Wednesday.
The Dow Jones Industrial Average rose 258.20 points, or 1 percent, on Wednesday, while the S&P 500 increased 0.65 percent and the Nasdaq Composite climbed 0.38 percent.
Wednesday’s gains were led by strong performances in the energy sector as Cirmex Energy rose 10.6 percent and consumer stocks such as Tiffany and Kohl’s each rose about 3 percent.
There’s growing concern that the inverted yield curve — where short-term debt provides a better yield than long-term debt — could be a sign of an upcoming recession.
The last time the yield curve inverted was in December 2005, two years before the financial crisis hit. The economic situation wasn’t helped by the news out of Britain where Prime Minister Boris Johnson asked Queen Elizabeth II to shut parliament down for more than a month, limiting the amount of time lawmakers have to debate leaving the European Union on Oct. 31.
