Yield curve data from the New York Fed and Investing.com, chart by Mish

The 2-month yield and the Effective Fed Funds rates are from yesterday. The 20-year yield is my estimate. My starting point is yesterday's number and I assume a similar reaction as the 30-year-long bond. 

Today's Bond Market Change 

• 2-Year: -0.11
• 3-Year: -0.13
• 5-Year: -0.13
• 7-year: -0.12
• 10-year: -0.10
• 30-year: -0.13

The last time I wrote about the yield curve was on June 12 in Yield Curve Inversions Return, Signaling Another Recession Warning. 

Here are the yields from June 14, when the 10-year yield peaked.

Yields on June 14

• 1-Year: 3.15
• 2-Year: 3.45
• 3-Year: 3.60
• 5-Year: 3.61
• 7-year: 3.60
• 10-year: 3.49
• 30-year: 3.45

Yields on July 1

• 1-Year: 2.70
• 2-Year: 2.81
• 3-Year: 2.86
• 5-Year: 2.89
• 7-year: 2.93
• 10-year: 2.89
• 30-year: 3.10

Change Since June 14

• 1-Year: -0.45
• 2-Year: -0.64
• 3-Year: -0.74
• 5-Year: -0.72
• 7-year: -0.67
• 10-year: -0.60
• 30-year: -0.35

Multiple times in and out of inversions followed by a sudden sustained decline in yields is a strong signal that recession has started. 

ISM

.@MarketWatch on @ISM #Manufacturing PMI®: “(Factories) are still operating at high capacity, but business is not growing as rapidly as it was last year. … (New orders slowed) because of high prices, long lead times and excess inventory.” https://t.co/Gfn641Gomo #economy #ISMPMI

— Institute for Supply Management (@ism) July 1, 2022

What triggered today's reaction was a poor ISM report in which new orders plunged 5.9 points from 55.1 to 49.2 to contraction.

Holy Grail of Stock Jocks Shocks

HOLY GRAIL OF STOCK JOCKS SHOCKS

ISM NEW ORDERS CONTRACTS FOR FIRST TIME POST STIMMIES FROM 55.1 TO 49.2, LOWEST SINCE MAY 2020

— Danielle DiMartino Booth (@DiMartinoBooth) July 1, 2022

Employment as Well

ISM manufacturing index amplifies concerns about the US economic outlook--not only due to the larger-than-expected fall in the composite to its lowest level in 2 years but also because of the slippage into contractionary territory for both the employment and new orders components

— Mohamed A. El-Erian (@elerianm) July 1, 2022

Aluminum

After 7 straight months of being listed in short supply, Aluminum is no longer being reported to be in shortage in the ISM manufacturing report.

— Skanda Amarnath ( Neoliberal Sellout ) (@IrvingSwisher) July 1, 2022

Fed Will Sacrifice the Economy

ISM New orders are contracting. The Fed has no choice but to continue to sacrifice the economy in the name of inflation. Quite the trap they put themselves in last year because they "misunderstood" inflation. pic.twitter.com/0yqX5E405p

— Michael Lebowitz, CFA 🇺🇦 (@michaellebowitz) July 1, 2022

The Fed Misunderstood Inflation

"ISM New orders are contracting. The Fed has no choice but to continue to sacrifice the economy in the name of inflation. Quite the trap they put themselves in last year because they 'misunderstood' inflation."

Musical Tribute 

Powell: "We understand better how little we understand about inflation”

In reference to misunderstanding inflation, please see Powell: "We understand better how little we understand about inflation”

The above link offers many quotes from the Fed, ECB, and Bank of England that show  central banks are clueless. 

On June 22, I commented I've Seen Enough, the US is in Recession Now, Q&A on Why

Forget about a soft landing. Recession has already started. The questions are how deep and how long? 

I will address those questions in another post.