Apparently, the sags are here to stay.
The US Treasury Actives curve (green) is downward sloping until 3 years, then upward sloping after 3 years. The US dollar swaps curve (blue) is downward sloping until 1 year, then double dips at 4 years before rising again. The overnight indexed swap rate (red) is downward sloping until 4 years then rises. This is called “the sag.”
But US markets are not the only one sagging. In Europe, the majors Germany (blue), France (green) and the UK (purple) sovereign curves are all sagging, with the exception of Italy (red).
(Bloomberg) — Italian bonds led a European rally as hints of fresh stimulus from policy makers outweighed the impact of easing global trade tensions.
The securities surged Monday to send benchmark yields below 2% for the first time since May 2018, while German bund yields hit a fresh record low. European Central Bank officials gave signals that action may be on its way in an effort to revive the region’s inflation, while investors in Italy are growing confident Rome will avoid punishment from the European Union over its budget.