Summary: Australian gradient flatter; US Treasury curve steeper.
The gradient of the ACGB yield curve became unambiguously flatter this week as yields rose at the short end. By the end of it, the 3-year/10-year spread had tightened by 3bps to 87bps and the 3-year/20-year spread had tightened by 5bps to 148bps.
In contrast, the gradient of the US Treasury curve became steeper as yields at the long end outpaced those at the short-end. The 2-year/10-year spread gained 5bps to 109bps and the 2 year/30 year spread added 3bps to 174bps. The San Francisco Fed’s favoured recession-predicting measure, the 3-month/10-year Treasury spread, finished 2bps wider at 125bps.
To find out more about the yield curve and its usefulness, click here or here.