FOMC has tightened monetary policy yet the US yield curve has flattened - ANZ

Analysts at ANZ explained that as the FOMC has tightened monetary policy since 2015, the US yield curve has flattened.

Key Quotes:

"Short-term interest rates have increased, with 2-year yields currently 2.3%. But 10- and 30-year yields remain low at about 2.8% and 3% respectively.

Low relative yields for these longer maturities could suggest that markets are not overly positive about future returns – perhaps signalling slower GDP growth.

But they could also suggest that “risk premiums” are lower; investors may not be worried about inflation, so don’t require much compensation to bear interest rate risk. Either way, it’s one to watch."