LONDON, Aug 10 (Reuters) - Part of Britain's government bond
yield curve inverted on Wednesday by the most in three years,
following a similar move in U.S. Treasuries driven by rising
fear of recession.
The two-year gilt yield rose above the 10-year
yield by as much as 6 basis points, though by the
end of the trading session the spread had closed to roughly
zero, according to Refinitiv data.
The last time the 2- to 10-year curve inverted by so much
was in August 2019, when Britain's economy had slowed to crawl.
Investors watch parts of the yield curve as recession
indicators, especially in the United States where it has also
inverted in recent weeks in the same two- to 10-year space.
Normally, a yield curve slopes upwards as investors expect
to be compensated for the risk of owning longer-maturity debt.
An inversion - where shorter-dated yields are higher than
longer-dated ones - is sometimes considered a warning of a risk
The curve in Britain inverted before the recessions of
1980/81, 1990/91 and 2008/09. It was also inverted between 1997
and 2001, when the UK economy continued to grow solidly,
although 2001 saw recession elsewhere.
With scant British economic data out on Wednesday, gilt
yields were moved primarily by weaker-than-expected U.S.
(Reporting by Andy Bruce; Editing by Mike Harrison)