Treasury yields have been on the rise this week across the entire spectrum of the yield curve, but looking at the charts of different maturities shows a very different picture the further out on the curve you go. Let’s start with the shorter end of the curve. At both the three-month and two-year maturities, yields clearly broke out as expectations for a March hike become further etched into stone.
Further out on the curve at the five-year maturity, the downtrend in yields off the highs from mid-December has been broken and yields have made a slightly higher high, but the breakout looks a lot less convincing.
Looking out to ten and thirty years, you may be thinking what breakout in yields? Not only have yields at these maturities yet to convincingly break above their downtrends from the December highs, but they still haven’t even attempted a higher high in yields.
With the short end of the curve seeing much more of a move than the long end, the yield curve shows little signs of wanting to steepen. As of Friday morning, the spread between the yield on the ten-year and three-month US treasuries was at 184 basis points (bps), which is down 26 bps from the post-election high of 210 bps in December. That’s quite a bit of flattening in an environment when the economy is supposed to be picking up speed, although it is still much steeper than the 142 bps level it was at prior to the election.
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