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davidovg
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Posts: 2
Joined: February 4th, 2020, 10:18 am

Flattening of the yield curve

June 25th, 2021, 9:39 am

What are your expectations of the future evolution of the yield curve in Europe and USA. My personal opinion is that the inflation is way higher than presented to us and it will sky-rocket once we return to "normal life", unless there are other prolonged lockdowns very soon. So flattening or steepening?   
 
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kc11415
Posts: 383
Joined: March 16th, 2003, 10:02 pm
Location: United States

Re: Flattening of the yield curve

November 6th, 2021, 2:49 pm

Not really new info for this wilmott.com crowd, but I posted something elsewhere for lay audiences.
I posted starting in January 2018, with an update in Dec. 2018 saying "I think it is more likely than not, that the recession will happen in time to be a factor for the 2020 elections. If these indicators are to be trusted then the recession looks it might happen in late 2019 or early 2020."
10YR-2YR Treasury yield spread as an economic indicator (lowest levels since before the 2008 recession)

Looking at https://fred.stlouisfed.org/series/T10Y2Y in the timeframe when you asked your question, yes there was some short-term flattening of the yield curve but it has since kind of gone into a holding pattern for now.  If you zoom out on the chart then you see many prior cases of modest chop up & down when in a holding pattern, but not the kind of flattening associated with recessions.