7 Jan 2015
Treasury yield curve steepens ahead of Fed minutes
FXStreet (Mumbai) - The yields at the long-end of the treasury market curve in the US rose, while those at the short-end remained flat to negative as we move into the December Federal Reserve minutes release.
As I write, the 10-year yield is up 2.2 basis points at 1.985%, while the 30-year yield is up 2.5 basis points at 2.548%. Meanwhile, at the short-end, the 2-year yield and the 1-year yield trade largely unchanged at 0.637% and 0.256% respectively.
The December policy statement had provided new economic projections, a fresh “dot point” Fed Funds rate projection table, and a press conference by Chair Yellen, where in the chairman indicated the possibility of a sooner-than-expected policy normalization in the US if the economy continues to recover rapidly.
Consequently, the yield curve flattened since last few days as the short-end yields, which mimic short-term interest rate expectations rose, while the ones are the long-end under performed due to risk aversion. However, the stability in stock markets seen ahead of the Fed minutes may have pulled up the yields on the long-end today.
The yield curve may flatten again if the Fed minutes indicate an increased possibility of an early interest rate hike in the US.
As I write, the 10-year yield is up 2.2 basis points at 1.985%, while the 30-year yield is up 2.5 basis points at 2.548%. Meanwhile, at the short-end, the 2-year yield and the 1-year yield trade largely unchanged at 0.637% and 0.256% respectively.
The December policy statement had provided new economic projections, a fresh “dot point” Fed Funds rate projection table, and a press conference by Chair Yellen, where in the chairman indicated the possibility of a sooner-than-expected policy normalization in the US if the economy continues to recover rapidly.
Consequently, the yield curve flattened since last few days as the short-end yields, which mimic short-term interest rate expectations rose, while the ones are the long-end under performed due to risk aversion. However, the stability in stock markets seen ahead of the Fed minutes may have pulled up the yields on the long-end today.
The yield curve may flatten again if the Fed minutes indicate an increased possibility of an early interest rate hike in the US.