The spread between the 2-month Treasury yield and that of the 10-year is climbing

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The yield curve, which flashed the biggest recession signal in more than 10 years and sent shock waves through the financial markets just a few months ago, is now signaling things are just fine. In fact, it’s saying things are more than just fine, it’s pointing to a faster economy ahead.

The spread between the 2-month Treasury yield and that of the 10-year note climbed to 28.7 basis points on Wednesday, its highest level since November 2018. This move is called a steepening by financial pros.

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The benchmark 10-year yield has risen about 40 basis points since the beginning of October as investors fled safe-haven assets. And investors have turned even more bullish on the economy

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“A resilient consumer will continue to drive moderate levels of growth and recession risks remain muted,” Michael Fredericks, head of income investing at BlackRock, said in a note on Wednesday.

The chance of recession in the next year fell the lowest level since June, according to respondents of the December CNBC Fed Survey. GDP is forecast to remain at 2% over the next two years, the survey which polled 43 fund managers, strategists and economists, showed.

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