The flattening yield curve: What it means

In an economy with an interest rate policy target (most countries, including the US), rates, in general, give us a straightforward forecast of the most likely value for future policy rate level. We currently have a situation in the US Treasury market where yields are compressing together across maturities, i.e. the yield curve is flattening. The compression is most pronounced in the near-dated end, where 1- and 2-year instruments are yielding much closer to 5-year bonds than they were in, say, 2014. The yield curve is not currently flat, just moving closer to a position of moderate flatness, indicating that…

This content is for Free Trial and Subscriber members only.
Log In Register

Comments are closed, but trackbacks and pingbacks are open.