Summary: Australian Commonwealth Government bond yield curve flatter again; US Treasury curve gradient steeper.
The gradient of the ACGB yield curve became flatter again as yields at the long end fell modestly. By the end of the week, the 3-year/10-year spread had tightened by 4bps to 107bps, while the 3-year/20-year spread finished 5bps tighter at 166bps.
In contrast, the gradient of the US Treasury curve became steeper. The 2-year/10-year spread widened by 6bps to 125bps while the 2 year/30 year spread increased by 12bps to 188bps. The San Francisco Fed’s favoured recession-predicting measure, the 3-month/10-year Treasury spread, finished 4bps tighter at 147bps.
To find out more about the yield curve and its usefulness, click here or here.