Wednesday, April 23, 2014

Yield Curve Is Flattening

Above is a chart of the difference between the 30 and 5 year CMTs -- constantly maturing treasuries.  Since the beginning of December, this spread has been declining. 

The reason for the decrease is a rally in the long-end of the curve as the 30 year CMT has decreased from ~ 3.9 to ~3.5, or a decrease of about 40 basis points.  That tells us that traders don't see inflationary pressures.