Yield Curve

Treasury yield curve flattest since 2012 reflecting a more hawkish than expected Federal Reserve. The market is more or less expecting a growth pickup to a + 3 % pace. The risk to this forecast seem to be on the downside and we are nowhere near reaching the 2 % inflation target.

“Expecting higher rates particularly in 2y1y part of the curve – we think post FOMC move has more to go. Ultimately all rates should move higher (including the backend) and the market may become extremely sensitive to any signs of a pick up in economic growth or inflation. We think that this past FOMC meeting may shake a general complacency in the front end.” (Goldman Sachs)

Treasury Yields

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