Yield curve flattening
MacroDefinition
Long-end yields and short-end yields converging. Two flavors: bull flattening (long rates falling faster — flight to safety, growth fears) and bear flattening (short rates rising faster — Fed hiking).
Bear flattening preceded both 2007-08 and 2022 inversions. Bull flattening often appears at recession starts as bond markets price aggressive Fed easing. Watching the SHAPE change matters more than the absolute level.
Bear flattening preceded both 2007-08 and 2022 inversions. Bull flattening often appears at recession starts as bond markets price aggressive Fed easing. Watching the SHAPE change matters more than the absolute level.