Is the Flattening Yield Curve a Cause for Concern?

Though it may not be signaling that a recession is imminent, the Fed should proceed with caution

Morningstar 04 July, 2017 | 13:45
Facebook Twitter LinkedIn

The yield curve has flattened in 2017. As you can see from the chart below (Exhibit 1), short-term yields have risen from where they started the year, while long-term yields are lower than they were in January. In a "normal" yield curve, the short-term yields are lower than long-term rates, because you would expect to be compensated for taking on more risk in the form of longer bond maturity.

Exhibit 1: US Treasury Yield Curve

201706 credit ch 1

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Member.

Register For Free
Facebook Twitter LinkedIn

About Author

Morningstar  

© Copyright 2021 Morningstar Asia Ltd. All rights reserved.

Terms of Use        Privacy Policy