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Treasuries Yield Curve Steepens on Fed Balance Sheet Plan

The yield curve from five to 30 years steepened for a fifth straight session, the longest streak since September, to 114 basis points, after minutes from the Federal Reserve’s March meeting revealed most officials backed a policy change that would begin shrinking the central bank’s $4.5 trillion balance sheet later this year. It’s the widest spread between the maturities since February. “People interpret balance sheet run off to mean less hikes,” said Priya Misra, head of global rate strategy at TD Securities. New York Fed President William Dudley has said normalizing the balance sheet could be a substitute for boosting the central bank’s benchmark.