They point to the recessions of 1991, 2000, and 2007-2009 as coinciding with flat yield
curves between three-month Treasury Bills and 10-year Treasuries.
Historically, flat yield
curves have been associated with tight money and high interest-rate policies.
Jonathan Krane, CEO of KraneShares, said, "China has a very flat yield
curve with relatively high interest rates versus the US, specifically in maturities under one year.
Particularly as the central bank is targeting, among other things, a flat yield
curve; Fed rate hikes will push up yields at the long end of the curve and necessitate hikes by the Turkish central bank.
Inflation expectations, pricing behavior and other factors that affect inflation will be closely monitored and the tight monetary policy stance will be maintained, by keeping a flat yield
curve, until there is a significant improvement in the inflation outlook.
The company said it now expects full year 2013 net revenue yields to be down 2 to 3 percent compared to the previous flat yield
guidance for the year.
The market consultation revealed that the current liquidity situation expressed by a flat yield
curve shifts market activity significantly into longer terms, in the OTC markets especially into terms over one year, he added.
Thereafter, we are likely to see a broadly flat yield
for a number of years as the banks go through a two to five-year de-leverage phase, selling down their property exposure to the returning institutional investors.
But the increases we have seen in the yield curve, coupled with a relatively flat yield
curve for real TIPS, warrant an ever-watchful eye to make sure that inflation expectations do not creep up.
The environment for the banking industry has grown difficult over the past several years, the result of historically low interest rates, flat yield
curves and significant margin compression.
An inverted to flat yield
curve for much of 2007 limited the bank's ability to make money last year, officials said.
Net warehousing income, which represents the net interest spread between the mortgage rate on a loan and the interest rate paid on a warehouse line of credit, dropped to $245 per loan from $294 per loan in 2005 and $481 per loan in 2004, due to the flat yield