Insight - More warning signs of US recession risks ahead

New signals: People in downtown Manhattan in New York City. Moves in the bond market over the past week show waning confidence in the Fed’s ability to achieve a benign outcome. — AFP

THE US government bond market is sending a fresh batch of signals that investors are increasingly convinced the Federal Reserve’s (Fed) aggressive actions to tame inflation will result in recession.

The shape of the yield curve, which plots the return on all Treasury securities, is seen as an indicator of the future state of health of the economy, as inversions of the curve have been a reliable sign of looming recession.