Treasury spread dips below 80bps ahead of NFP release

The treasury yield curve or the spread between the 10-year Treasury yield and the 2-year Treasury yield fell below 85 basis points ahead of the US August non-farm payrolls release. 

The spread currently stands at 79 basis points. The weekly low is 78 basis points. The 10-year Treasury yield is trading at 2.127%, while the 2-year yield hovers at 1.334%. 

The long duration yield fell yesterday after the Fed’s preferred gauge of inflation - the core PCE figure registered a tepid increase in July. 

The focus today is on the US wage growth numbers. Signs of wage price inflation would open doors for a quicker pace of policy tightening. Thus, the yield curve would steepen [spread would widen] if the wage growth numbers beat estimates.