With oil prices collapsing this year amid a widening supply glut, one technician sees another reason to be worried about crude — namely, an economic indicator in the bond market.
Rich Ross of Evercore ISI is watching the yield spread between the two-year and 10-year Treasury notes, which measures the difference between the bond yields. Compared to the chart of oil, the two seem to move in very close correlation, he said Thursday on CNBC’s “Trading Nation.”
However, Ross said the spread has stayed alarmingly low, even after the Federal Reserve decided to raise the federal funds rate on Wednesday. As a measure of economic growth, he said, a declining spread may mean weak global demand will hit oil prices even harder.
