US Treasury yield curve flattens to lowest level since financial crash

Concerns about rising rates

The difference between short-duration and long-duration US Treasury yields narrowed to the lowest levels in over ten years on Wednesday, as investors expressed concerns about the rising rate environment and a spike in inflation.

The spread between 2-year Treasury yields and 10-year Treasury yields narrowed 1.8 basis points to 48.9 bps, while the spread between the two-year and 30-year Treasury yields fell 1.6 bps to 74.5 bps, both at the lowest levels since October 2007. The flattening of the yield curve, which is regarded as a predictor of recession, has largely been driven by new Federal Reserve chairman Jerome Powell's warning of "elevated" asset prices in some areas and the potential for a more aggressive tightening cycle over the next two years. Powell (pictured), who has adopted a more hawkish stance th...