Term Spreads And Economic Policy Uncertainty

In August, an elevated economic policy uncertainty index was associated with an increasingly inverted yield curve. The measured Economic Policy Uncertainty (EPU) index as of today is 582 (sure to be revised, but still…).

Buckle up!

(Click on image to enlarge)

Figure 1: Treasury 10yr-3mo term spread (blue, left scale), 10yr-2yr (red, left scale), and 5yr-3mo (teal, left scale), all in %; and Economic Policy Uncertainty (EPU) index (black, right scale). Source: Federal Reserve via FRED, Treasury, and policyuncertainty.com, accessed 9/29.