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U.S. Bond Market Flat Yield Curve Warns the Economy


June, 22 2017
watermark Economic news

Federal Reserve authorities are applying more on a hawkish side on the next rate hike signifying less confident prediction for long-term economic growth. The U.S. Treasury yield curve giving a flat yield curve forebodes warning signals on the economy. Buyers will look out for higher yields especially for long-term debts when costs increase.

Dallas Fed president said that the cause of the yield curve is the weakened market growth while the New York Fed president described the reason to be the low offshore inflation and borrowing rates instead of a sluggish economic growth.

However, the flat yield curve could further ease the current financial condition amid the efforts of Fed to tighten its monetary policies but would benefit riskier assets such as stocks that are not easily affected by the strength of the economy. Nevertheless, the Fed cannot manage the whole monetary base since there are still parts under shadow banking which are larger than what the Fed controls in the present as described by a market strategist.


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Foreign exchange is highly speculative and complex in nature, and may not be suitable for all investors. Forex trading may result in a substantial gain or loss. Therefore, it is not advisable to invest money you cannot afford to lose. Before using the services offered by ForexMart, please acknowledge the risks associated with forex trading. Seek independent financial advice if necessary. Please note that neither past performance nor forecasts are reliable indicators of future results.