Yield Curve Subplot
The yield curve has continued to flatten; however, because rates are rising simultaneously, it is a less ominous indicator for the economy relative to if yields were falling. Here are two ways in which the yield curve can flatten:
A bear flattener is an environment in which rates rise across the yield curve, but short-term rates rise more so, leading to a flatter yield curve.
A bull flattener is an environment in which rates decline across the yield curve, with long-term rates declining more, also leading to a flatter yield curve.
The bull and bear distinction reflects whether the move is good or bad for bonds, th... Read more