Last week we wrote that Treasury yield spreads between 30-year and 5-year Treasuries have not been this low since 2007. That spread was 18 basis points when we published and stood at five basis points as of Friday’s market close. Treasury yields continue to rise and the yield curve continues to flatten as short-term treasury yields increase faster than long-term treasury yields (the 30-year stood 2.60 on Friday, 14 basis points lower than the 20-year). In short, flattening of the yield curve is the bond market’s signaling a looming recession for the U.S. economy. We agree with the bond market. It is simply impossible for the Fed to increase rates, shrink the money supply (quanitative tightening) and not shrink economic output / GDP. View daily treasury yields HERE.