Fed on Collision Course With Bond Markets in Curve Conundrum
- Flattening yield curve could derail Fed hike plan: BofAML
- Inflation expectations drop, yield spreads a policy headache
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The conundrum faced by Alan Greenspan is back -- and possibly worse. This time, the Federal Reserve is confronting a “far more dangerous” backdrop in the bond market as it gears up to further raise interest rates.
The prevailing dynamics in the Treasury market -- an ever-narrowing gap between short and longer-term U.S. Treasury yields, and record lows in forward rates for this point in the monetary cycle -- could derail the Fed’s tightening path, according to Bank of America Merrill Lynch.