Summary: Australian Commonwealth Government bond yield curve considerably flatter again; US Treasury curve gradient significantly flatter.
The gradient of the ACGB yield curve became considerably flatter for a second week as yields at the short end ran up harder than longer-term yields. By the end of the week, the 3-year/10-year spread had tightened by another 15bps, time to 111bps, while the 3-year/20-year spread finished 24bps tighter at 171bps.
The gradient of the US Treasury curve also became significantly flatter. The 2-year/10-year spread tightened by 12bps to 119bps while the 2 year/30 year spread decreased by 23bps to 176bps. The San Francisco Fed’s favoured recession-predicting measure, the 3-month/10-year Treasury spread, finished 3bps tighter at 143bps.
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