The US curve narrative: we are slowly moving away from the potential inversion that pre cursored GFC in 2008. The 10 year has finally got a grip as it punches through 2.7% and the expectation for the belly is higher. So USD follow ? Not so fast – deferential traders are still in pain. And it hurts.   Two things to keep in mind: 30 year has nudged a little up at 3% BUT the spread between 2s and 10s is still rubbish as it flirts to .6% – 1.5% being the post GFC “normal” what ever that means.  QT IS or IS NOT the cause. I don’t know, or care right now. It is FAR too early to say.  Equity flows continue to take over yield hungry carry trades – in my book anyway. I see nothing changing but trouble ahead. The Wolf cites mortgage problems ahead and i concur.  So the big question is do i see USD higher or lower? Please don’t get annoyed but i see it a bit higher then much lower as 2018 wraps. LOL

Um, Is the US Treasury “Yield Curve” Steepening or Flattening?


Patrick Reid
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