Bond Traders Flatten Yield Curve Even as Inflation Set to Bounce
- Fed’s preferred inflation gauge may reach highest since March
- Curve is narrowest in a decade as more rate hikes seen
Steepening Yield Curve Drama
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The bond market is showing little fear of the inflation bogeyman, even before a report that’s projected to show a key measure of price growth climbing.
That’s the signal from the Treasuries yield curve, which from five to 30 years is the flattest since October 2007. The yield spread between these maturities touched 52 basis points last week after Federal Reserve Chair Janet Yellen downplayed the significance of the relentless trend. She said the curve “could more easily invert” nowadays with the term premium for longer-dated bonds so negative.