The US 10-year treasury yield has dropped from 2.63% to 2.3% over the last few weeks, despite strong US labor market data. Furthermore, the long duration yields aren’t rising as fast as the yields at the short-end of the curve.
So is the flatter yield curve signaling economic slowdown?
John Eade, President of Argus Research says the labor market strength would eventually drag rates and stock markets higher.
Eade says the Fed could begin dumping some of the bonds it holds on its balance sheet in order to engineer a steeper yield curve and remain ready to buy them back under a fresh QE program if the situation warrants.
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The bubble in the 10-year treasury yield
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