The flattening accelerated after consumer price index data came in largely as expected, perhaps bringing other market-moving events, like President Trump’s threat of a missile attack on Syria, into focus.Īn incomplete point in this ultra-brief article is that yield curves routinely flatten in the post-1980 period 'relentlessly' when the Federal Reserve inflates short-term interest rates by restricting the supply of money in the financial system. The spread between 5- and 30-year Treasury yields, as well as the gap for 2- and 10-year maturities, tumbled Wednesday to the lowest levels since 2007, at 37.2 basis points and 45.7 basis points, respectively. Here it is in almost its entirety: The Yield Curve Is Flattening Relentlessly The (brief) interest rate flattening storyīloomberg News, which tends to both follow and set the agenda for what's happening now and in the somewhat near future, ran a very brief article with a portentous title Wednesday on a topic near and dear to my investor's heart.
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