Flattening of the yield curve

Flattening of the yield curve

A change in the yield curve when the spread between the yield on long-term and short-term Treasuries has decreased. Compare steepening of the yield curve and butterfly shift.

Flattening of the Yield Curve

A change in the yield curve for bonds in which the yield spread on short-term and long-term Treasury bonds decreases. That is, a flattening of the yield curve occurs when either the yield increases for short-term bonds and decreases for long-term bonds, or vice versa. It is important to note that the yield curve is a graphic representation, plotting yield against maturity.
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Some worry that the flattening of the yield curve is a sign of higher recession risk (though I see it more as a reflection of foreign purchases of longer-maturity US bonds turbocharged by institutional liability-driven investments).
These non-traditional sensitivities indicate that if a substantial flattening of the yield curve occurs--with long-dated yields either falling by more than short-dated yields, or rising by less than short-dated yields--then the value of liabilities in the cash balance plan will fall.
That said, a continued flattening of the yield curve is a high probability, indicating a weak economy.
These translated into the flattening of the yield curve driven by lower yields for longer tenors," the research said.
The outlook for NIMs is a bit clouded, as the first rate hike will be preceded by the end of the Fed's bond-buying programme, which is expected to result in a flattening of the yield curve.
The outlook for NIMs is a bit clouded, as the first rate hike will be preceded by the end of the Fed's bond-buying program, which is expected to result in a flattening of the yield curve.
Barra Sheridan, a rates trader at Bank of Montreal in London, then said: "The flattening of the yield curve is continuing.
In comparison, the period of 2003-2005 had the Fed lower the Fed Funds rate to 1% before unwinding it leading to a flattening of the yield curve, with short rates rising dramatically, while long rates actually declined slightly.
There's been a flattening of the yield curve, a squeeze on interest margins and a squeeze from the economic slowdown.
The reason for that more reporting is the change in the interest-rate environment; specifically, there's the flattening of the yield curve, and that effectively lowered the HMDA regulation's trigger for reporting a loan as higher-priced.
The recent flattening of the yield curve has generated significant controversy.