'Hawkish' Fed Minutes Crush Yield Curve To Flattest Since Start Of Last Recession

The persistent flattening of the Treasury yield curve appears to still have legs, and that may be a sign of economic trouble ahead.

As Bloomberg details, on Wednesday, the minutes of the Federal Reserve’s September meeting revealed policy makers’ resolve to stick to their tightening path.

The yield curve's reaction to that un-data-dependent hawkishness is very evident... (worsened by today's strong 30Y auction)

The difference between five- and 30-year yields fell below 92 basis points, near the lowest since the start of the last recession.

Policy Error?

Five-year Treasury notes are among the most sensitive to Fed policy.

Who needs an inverted curve for a recession after all?

Furthermore, banks don't seem to need a steeper curve either...


Bryan Thu, 10/12/2017 - 15:30 Permalink

Hawkish or Dovish, which is it?  I've seen both titles here on ZH.  If so hawkish, why is the USD retracing back down again today?

adolphz Thu, 10/12/2017 - 15:33 Permalink

Hawk dove is the view.  Funny SHEP WAVE called market moves again today.  I am thinking their big move in stocks starts by Monday latest. Nice gold move. 

Blue Steel 309 Thu, 10/12/2017 - 15:41 Permalink

The really impressive thing, is that they can keep it held together with the magnitude of the instability factors. It is pretty easy to find charts that are so divergent, the whole thing should break apart.

Blue Steel 309 Thu, 10/12/2017 - 15:49 Permalink

They can't keep balancing the circulating money supply with the electronic debt supply forever. Even now, every attempt to pump some more in is getting countered by rich people and middle class hoarders taking it right back out.