The US Treasury yield curve has flattened to almost pre-Covid levels, signalling fear of inflation. And given our bottlenecked economy that The Fed and Federal government seem not to understand (or care), the flattening signals a wild ride ahead.
The Treasury yield curve flattened sharply Monday as surging energy prices stoked inflation fears and added fuel to growing expectations that the Federal Reserve will have to lift policy rates as soon as next year.
The gap between 5- and 30-year yields shrunk to as little as 84.5 basis points, raising concerns over it potentially signaling a growth slowdown, before rebounding to about 88 basis points. The low Monday put the spread at its least since April 2020, a time when pandemic fears brought the global economy to a near shutdown. Five-year yields are up 4 basis points to around 1.168%, while the 30-year bond yield was down around 1 basis point at 2.03% at 12:36 p.m. New York time.
Instead of cryptocurrencies, we might be better off with Schrute Bucks as a hedge against inflation.