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Bond Market Dynamics Are Flipping as Fed, BOE Part Ways on Rates

  • U.K. curve hasn’t been this steep versus U.S.’s since 2019
  • BOE softens guidance on hikes, Fed highlights inflation risks
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Wells Fargo Sees A 'Very Flat Yield Curve'
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The U.K. yield curve hasn’t been this steep compared to its U.S. counterpart in over three years as the Federal Reserve takes a more hawkish stance on inflation than the Bank of England.

The extra yield investors demand to hold 10-year government paper over two-year notes in the U.K. widened to about 32 basis points on Monday. That compares with 22 basis points for the equivalent spread on U.S. bonds, and puts the difference at levels last seen in September 2019.