Quick post here. I caught a tweet by Bloomberg's Lisa Abramowicz this morning noting that the yield curve was at its flattest since the Great Financial Crisis. Looking at the data, I noted that the 10-year bond is trading at only 49 basis points more than the 2-year bond. That is under the 50 basis point threshold I set out in November.
Curve flattening from unresponsive back end
All of the action has been at the front of the curve where the Fed has the most control.
For me, it is worrying that the flattening is all 'front-ended'. It says we are back to Greenspan's conundrum. Then-Fed chairman Alan Greenspan mused aloud on the Fed's inability to get long-dated Treasuries to react to the Fed's rate hike train. Eventually the curve inverted and we went into ...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.