Goldman Says Keep Up the Yield-Curve Flattening Trade
- Steepening ‘somewhat technical in nature,’ strategists say
- Firm’s forecasts indicate curve inversion ahead in 2019
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Goldman Sachs Group Inc. has a message for the bond market: Keep calm and carry on with the yield-curve flattening trade.
The gap between 2- and 10-year Treasury yields steepened last week by the most since February, pushing the spread to 33 basis points. It was as low as 18.3 basis points in August, the smallest since 2007. Yet the about-face, as long-term yields broke above key technical levels, is only a pause in the march to inversion as the Federal Reserve is set to tighten policy further, Goldman strategists including Praveen Korapaty wrote in a note Wednesday.