Yield Curve Continues to Flatten in Second Quarter as First Quarter Themes Persist
The Treasury yield curve flattened for the second consecutive quarter as short-term yields rose due to a rate hike during the Federal Reserve’s (Fed) June 13 – 14 meeting. Long-term rates gradually declined over the quarter on declining inflation expectations, which were pushed even lower by oil’s 9% decline in price over the quarter [Figure 1]. The decline in longer-term yields was a tailwind for fixed income generally.
Much like the first quarter, economically sensitive domestic sectors of the bond market were aided by investors’ ongoing search for income in a low-yield, low-return environment and by ste... Read more