Short term treasury
yields are down on the day while long term yields are up. On a day-to-day basis
that could be noise but the day after the FOMC decision, it could be a signal. When
long term yields rise faster than short term ones it’s called a “bear steepener”.
The message
that the bond market is sending could be of growth expectations where short
term yields remain more or less anchored around 5% due to the Fed’s unwillingness
to either cut or hike and long-term yields advancing towards the same level on
growth prospects.
That is
good news on one hand, but could also be bad news on the other as inflation
might remain stuck above the Fed’s 2% target or worse, re-accelerate.
US 2-10y Spread