Summary: Australian Commonwealth Government bond yield curve flatter again; US Treasury curve gradient also flatter.
The gradient of the ACGB yield curve became flatter again as yields fell by increasing amounts as tenors increased. By the end of the week, the 3-year/10-year spread had tightened by 2bps to 95bps and the 3-year/20-year spread had contracted by 5bps to 152bps.
The gradient of the US Treasury curve also became flatter. The 2-year/10-year spread narrowed by 9bps to 106bps and the 2 year/30 year spread decreased by 9bps to 169bps. The San Francisco Fed’s favoured recession-predicting measure, the 3-month/10-year Treasury spread, finished 6bps tighter at 125bps.
To find out more about the yield curve and its usefulness, click here or here.