Steepening Yield Curve

Thursday, May 28, 2009

Since the beginning of 2009, the US government yield curve has steadily steepened. The front end of the curve has seen a minor 14 basis point uptick while the back end has experienced a 176 basis point rise from 1/02/09 to 5/27/09. This steady steepening demonstrates rising expectations for inflation as the economy begins to recover. Investors need greater compensation to counteract the interest rate risk they are facing in longer-dated maturities.


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