A change in the yield curve where the spread between the yield on a long-term and short-term Treasury has increased. The yield curve has steepened a bit compared to where it was a week or even a month ago. Humped. You want to see long-term rates go up relative to short-term rates. Laddered --> Good for liquidity management (duh, it has the most cash flows) Bullet --> Likes Steepening. In this conversation with Real Vision's Ed Harrison, he says that the result will be a steepening yield curve and potentially "generational" investment opportunities due to the economic dislocations. The US Treasury yield curve is steepening, with the longer duration yields tracking the inflation expectations higher. However, the bigger story is what the yield curve steepening means. The change has occurred as longer-term Treasuries lose value, lifting their yields. The current 10-year/2-year spread, at +81 basis points (Dec. 15), is still unusually low by historical standards. There are two types of yield curve risk: steepening and flattening. Likes Decrease in Curvature. Buy & Hold --> Likes Static. Assuming the steepening of the US yield curve remains intact, USD/JPY may threaten its 100-day moving average at 105.87. True yield curve spread filters out directional effects (i.e., changes due to parellel shifts in the yield curve) and responds only to changes in the slope of the yield curve (i.e., non-parallel shifts). This means that the yield of a 10-year bond is essentially the same as that of a 30-year bond. To understand why, it’s important to know what drives the shape of the yield curve. We think that long-term U.S. Treasury rates will drive changes in the yield curve because short-term yields are anchored by the near-zero federal funds rate. The yield curve has been steepening for the last month, and yesterday hit its highest level since July 30. With US treasury yields on a tear, one might think the curve is steepening. You may have read news articles or heard somewhere that "the yield curve is flattening," but what does that mean? Filmed July 1, 2019 in New York. The steepening yield curve extends the sharp turnaround in the prior safe-haven trade in August that sent the curve into an inversion and fueled fears of an impending recession. You lose some gain in the short rates, but protect against a greater loss in the long rates; that is, the long loss is greater because duration for long-maturity securities is greater. The last 3 recessions occured with a steepening yield curve. Rosenberg argues that it represents one of Blackrock's pre-election themes, i.e. Another widely followed curve spread, the yield difference between 3-month Treasury bills and 10-year Treasury notes, recently inverted and troughed at -25 basis points, which makes the likelihood of a near-term recession significant. bond update with us 2/10 yield curve focus. The spread between the 10- and two-year yields has risen to 96 basis points, the highest level since July 17, 2017. The first chart is the monthly 2/10 yield spread from St. Louis Fed with highlighted recessions. Key Points. Most of the (strong) monthly trends are still intact. Conversely, a situation in which the yield curve is flat is called flattener. Many fear a yield curve inversion is signaling a recession, but strategists say a quick re-steepening would be scarier since the anticipated downturn could then be close at hand. That is the Australian bond market yield curve. Also known as a steepening yield curve, this type of plot occurs when there is a relatively large difference between short and mid-term bonds. Next, don’t forget there was a virtual stampede of money into bonds over the summer as investors worried about President Trump’s trade war against China . But the spread has also been trending higher, in fits and starts, for a year-and-a-half and is now at a three-year high. ... That the US yield curve is steepening … A steepening yield curve has preceded the three most recent recessions. If we are correct, the only recession warning investors will get could be the aforementioned curve steepening. They should probably take a breath. Exhibit A is the gradual but persistent steepening in the Treasury yield curve over the past year-plus. 5. With Fed on hold, short rates should stay anchored near zero. Steepening of the yield curve. The Federal Reserve's shift to letting inflation run over its target of 2%, to make up for slower-than-aimed-for inflation, is driving Goldman Sachs's view that the steepening yield curve … The US Treasury yield curve is steepening, with the longer duration yields tracking the inflation expectations higher. A "bull steepening trade" is a combination of trades that makes money if interest rates go down AND the slope increases. Below are two charts with DeMark signals that have also been helpful at inflection points The steepening yield curve suggests that the Treasury market is betting that the claims filings will soon fade and the labor market’s recovery will strengthen. Profit-taking this morning has seen USD/JPY retreat to … A flattening of the yield curve usually occurs when there is a transition between the normal yield curve and the inverted yield curve. “In the short term, banks can outperform on the yield curve steepening that should accompany any further post-pandemic return-to-normal trade,” … These 4 trades are "double bets" on two aspects of rates: the level and the slope. As a result, we anticipate that 30‑year yields will increase, so we have positioned the fund for modestly higher long‑term rates and a longer‑run continuation of the yield curve steepening that began in May. 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