Steepening of the yield curve

Steepening of the yield curve

A change in the yield curve where the spread between the yield on a long-term and short-term Treasury has increased. Compare flattening of the yield curve and butterfly shift.
References in periodicals archive ?
The cost to hedge against the steepening of the yield curve (which means the longer dated securities yield more than shorter ones due to expectations of higher rates even as inflationary pressures rise) is quite low.
'There will also likely be an increase in the issuance for longer-dated debt by banks with a maturity of one year or greater, which could lead to a steepening of the yield curve,' it added.
Kashkari also noted that steepening of the yield curve is a good sign, as it gives the Fed more room to tap the brakes if needed.
There was some steepening of the yield curve and 10-year treasuries are testing the 2.30% resistance level."
The depreciation of the pound had had a sizeable effect on UK government bonds, with a sharp increase in bond yields and a steepening of the yield curve by 20 to 35 basis points at the five-year maturity and beyond.
Interest rates are likely to remain subdued, however it is noticeable that there has been a steepening of the yield curve. This means that longer dated Treasuries are selling off more than shorter-dated government stocks.
The steepening of the yield curve will benefit bonds with five- to 10-year maturity as they are likely to outperform bonds with higher maturities (above 15 years) on a risk-adjusted basis.
"This would result in hikes to the Fed Funds target rate to 3 percent by end-2015 and 5 percent by end-2016 - in turn causing a sharp steepening of the yield curve, financial market volatility, and a spike in spreads over US treasuries for high-yielding assets," Fitch said.
Absent a steepening of the yield curve in 2013, Fitch said it expects margin compression to continue in future quarters, as banks exhaust opportunities to re-price loans, while higher-yielding securities run off.
In particular, we are concerned about the adequacy of credit allowances and the sustainability of reported net interest margins, which have benefited heavily from the steepening of the yield curve.'
Treasuries has steepened significantly, which should help bank profitability, reducing some of their need to raise additional capital.While an inverted yield curve has proceeded every post-WWII recession, the steepening of the yield curve we've seen over the past 18 months is similar to what happens in anticipation of an economic recovery.The yield curve is a leading indicator, which means the recovery won't come this year.
Sales of annuities with market value adjustments (MVAs) benefited from the steepening of the yield curve. This improved the value proposition for buyers wanting to lock in longer term guarantees.