MysteryHedgie draws our attention to the flattening yield curve and its implications…
Not widely discussed is the flattening of the US yield curve (see below – 10 year less 2 year yield), caused primarily by the rally in the “long end”, as the Fed has stated its intention to leave short rates close to zero for an extended period.
Intuitively this flattening could be viewed as a sign of economic softness ahead. This is all the more interesting given that there have been whispers that Friday’s NFP could be a positive number, as against expectations of -200k. Expect equities, commodities and the US$ to take their cues from the bond market in coming days; Friday’s report is more important than usual.
The Yield Curve Flattens
Despite following the equities market for quite a while now I have no idea what you’ve just posted above. What sort of things should I read up on to get a clue on what you were talking about above? Or would you care to elaborate a little?
By: James Z on September 30, 2009
at 7:59 am
[...] MysteryHedgie: Behold The Flattening Yield Curve! – Not widely discussed is the flattening of the US yield curve (see below – 10 year less 2 year yield), caused primarily by the rally in the “long end”, as the Fed has stated its intention to leave short rates close to zero for an extended period. Intuitively this flattening could be viewed as a sign of economic softness ahead. – Outside the Box Blog [...]
By: Economy and Markets: M3 & Deflation, Japan & Deflation, Reverse Repurchases, Vigilantes, Know The Math, IMF Forecast, Flatter Curve, on September 30, 2009
at 12:51 pm