So far this month, a widened negative spread between 10-year and 3-month U.S. Treasury yields has resulted in bumpy returns for U.S. banks and thrifts.
The SNL U.S. Bank and Thrift index has returned a positive 8.9% year-to-date while the S&P 500 returned 16.7%. However, the bank index has returned a negative 8.9% in August, compared to S&P 500's negative 2.9%.
The 10-year Treasury yields have been below 3-month Treasury yields for 68 nonconsecutive days this year, with the spread widening to negative 39 basis points as of Aug. 15. However, the spread is still not as wide as in the days prior to previous recessions.
While the spread between 10-year Treasury and 2-year Treasury notes inverted briefly during the week of Aug. 12, it recovered and is currently 7 basis points in positive territory.

