Yield curve steepening, but there’s more to the story
The yield curve can steepen under inflationary pressure (e.g. 2020) or deflationary pressure (e.g. 2008). The most recent steepener was inflationary. This new one well, my bet is the opposite. So to repeat, everyone is on one side of the macro boat and a post-inversion steepener usually comes with an economic bust.
This market is rapidly turning into an indicator nerd fest. I am absolutely titillated. Now I need to try to maintain some balance of patience, perspective and sentiment strength in trying to identify when the herds – especially the inflation herds – are at their final puke points. Oh and there’s inflation data upcoming this week. Nerds, geeks and dorks to attention!
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Phenomenal patience and work thus far. I cannot believe the rubber band stretched nature of 10s/2s, 10s/3month, and 30s/5s. The slingshot and volatility underlying a rapid steepener could / is epic.
Thank you my fellow nerd.