Treasury Curve Flattens As Mid-Term Yields Climb Most

Investors ditched the Treasurys most sensitive to rising interest rates while gobbling up longer-term securities on Monday, sending the differential between their yields to the narrowest since 2009.

The market began pricing in earlier-than-expected hikes to the Federal Reserve’s key policy rate after Fed Chairwoman Janet Yellen said the central bank likely would begin raising rates about six months after it ends its bond-buying program. That timeline was somewhat sooner than investors had expected. The middle of the yield curve, which is most sensitive to shifts in central bank policies, has sold off the most in response.

Meanwhile, the Fed said that even after the economy meets inflation and unemployment targets, it expects the lending rate to remain below normal by historical standards, which has helped push long-term yields lower in recent sessions.


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu