Curve Flattening Returns With Gusto as Fed Pledges More Hikes
- Long end leads gains after central bank lifts interest rates
- Steepening camp remains focused on outlook for more supply
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Treasuries traders had little alternative but to return to business as usual after the Federal Reserve’s latest rate hike. For most bond-market participants, that meant flattening the yield curve.
Traders looking for an extension of the modest curve steepening that led up to Wednesday’s Fed meeting had only a brief moment in the sun. Shorter-maturity yields dipped on the Fed’s statement, which dropped a reference to policy as “accommodative” -- interpreted by some as a signal that the Fed was nearing the end of its tightening campaign.