The yield curve between the US 10-year and 2-year yields is now at its steepest since May while the yield curve between US 30-year and 2-year yields is now at its steepest since 2022. It is clear of the direction this is all heading and has been going since last year. That said, this is coming despite getting confirmation of the Fed stance of wanting to ease monetary policy and the fact that inflation has come down from the highs previously.
In simple terms, it reflects the notion that the market is factoring rate cuts in the short-term but in the long-term is still pricing in a inflation/growth premium. In this case, I would argue that it is mostly about inflation.
In thinking about the steepening of the yield curve, it's a signal that the Fed might be making a policy mistake. The result of what we're seeing now is akin to a bull steepener, but one that is playing out not because of slowing inflation but rather stagflation risks. It's a unique scenario in that sense that one could easily overlook.
The risks associated here are nothing quite like the 1970s I would imagine. However, the parallels we're seeing in terms of how the events are playing out are rather uncanny.
And guess which asset class would stand to benefit from this the most? Oh, yes. Gold again. That's another major tailwind for the commodity and why there remains such a bullish fundamental case for gold. ?
This article was written by Justin Low at investinglive.com.Hence then, the article about the us yield curve continues to steepen post jackson hole was published today ( ) and is available on forex live ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
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