Treasury Flash Crash Inverts 1Y-2Y Curve

Things are just breaking left and right in the market now.

Shortly after the 1 PM stock market close (but before the 2 PM bond market closure) we pointed out that the 2Y yield had flash crashed on what appeared to be a short seller capitulating violently. Well, something else rather remarkable happened in that brief spike in activity: as 2Y yield tumbled first below 2.58% and then below 2.56%, the 12 Month (1 Year) Treasury - 2 Year Treasury curve inverted suddenly, sliding as low as -0.02%.

(Click on image to enlarge)

As one would expect, this was yet another of those "since 2008" events, because the last time the 1Y-2Y curve inverted was during the panic of the 2008 financial crisis.

(Click on image to enlarge)

And with a massive short overhanging still waiting across the entire curve as we discussed yesterday, expect many more such "breakage" events to take place in the coming days.

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