Relentless Yield Curve Flattening
Most economists expect the Fed will hike at least twice more this year. If so, portions of the yield curve may invert.
Basis Point Spreads
- 3-month to 1-year: 36
- 1-year to 2-year: 23
- 2-year to 3-year: 15:
- 3-year to 5-year: 19
- 5-year to 10-year: 16
- 1--year to 30-year: 32
If the fed hikes twice more this year, with the one-year yield at 2.11 and the 3-month yield at 1.75, there is little room for anything but inversion or a nearly flat curve if rates on the long end fail to rise.
For discussion of the long bong trend, and Lacy Hun'ts law of diminishing returns, please see Relentless Yield Curve Flattening.
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Sadly the Federal Reserve needs to raise rates to sell their treasuries which are now mainly short term US Treasuries. They can raise long term rates by switching to longer term treasuries which will push up rates if they can sell them. The ROW especially China have increasingly refused to buy long term Treasuries because of the US's monetary games (yes the US plays monetary games as well, not just China).