1-, 2- and 3-Year Treasuries

Ed Bradford, the brilliant bond tweeter (@fullcarry), noted this morning that the part of the yield curve between one and three years out is now the steepest part of the curve. This is where we investors can try to figure out what the Fed has up its sleeve.

Check out this chart:

You can see how the one-year yield (the black line) has stayed pretty flat. But the two- and three-year yield (blue and red lines respectively) have gradually inched higher. In short, the market thinks higher rates are coming — not now, but soon.

Meanwhile, longer-term rates have been moving in the other direction — they’ve been coming down. As of yesterday’s close, the 10-year yield was 54 basis points below where it was at the end of last year. The 20-year yield is down 75 basis points and the 30-year is down by 73 basis points. Low long-term rates hit bottom on the Thursday before Labor Day and have come up some.

Posted by on September 10th, 2014 at 9:20 am


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