A twist steepener is widening the gap between short- and long-term U.S. Treasury yields and is dragging the dollar lower. Political interference by President Trump in the Federal Reserve, weak economic growth, and inflation risks are exacerbating the dollar's decline. The dollar is down 9.69% on the DXY index year-to-date. The S&P 500 reached a record above 6,500, with futures only slightly down premarket, signaling investor complacency about high equity valuations. Two-year Treasury yields have fallen to about 3.635% while 30-year yields have risen to about 4.904%, steepening the curve and signaling falling confidence in low-risk assets.
A "twist steepener" in the bond market is widening the gap between short- and long-term U.S. Treasury yields. This dynamic is dragging the dollar lower, exacerbated by President Trump's political interference in the Fed, weak growth, and inflation risks, according to analysts at Convera. The dollar is down 9.69% on the DXY index year-to-date. The S&P 500 hit a new record above 6,500 for the first time ever yesterday,
Over in the bond and currency markets it's a different picture. The yield on 2-year treasuries was sitting at 3.635% this morning and it has been declining all year. The yield on 30-year treasuries, however, was at 4.904% this morning and it has been rising all year. The curve that plots the gap between them over time is rising-and analysts at Convera, an FX payments platform, earlier this week started worrying that this looks like a "twist steepener" or a "bear steepener" in the bond market.
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