Treasury Curve Flattens As Mid-Term Yields Climb Most

Investors ditched the Treasurys most sensitive to rising interest rates while gobbling up longer-term securities on Monday, sending the differential between their yields to the narrowest since 2009.

The market began pricing in earlier-than-expected hikes to the Federal Reserve’s key policy rate after Fed Chairwoman Janet Yellen said the central bank likely would begin raising rates about six months after it ends its bond-buying program. That timeline was somewhat sooner than investors had expected. The middle of the yield curve, which is most sensitive to shifts in central bank policies, has sold off the most in response.

Meanwhile, the Fed said that even after the economy meets inflation and unemployment targets, it expects the lending rate to remain below normal by historical standards, which has helped push long-term yields lower in recent sessions.

MarketWatch

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