28 June 2021
Steeper for longer
As the cycle matures, rate hikes approach and the yield curve typically flattens. We’ve seen this market dynamic playing out quite clearly following the latest Fed meeting. The central bank’s ‘dot plot’ – a graphical representation of the committee members’ economic and rate expectations – showed two hikes in 2023 rather than zero as previously, triggering a sharper selloff in shorter-dated Treasuries and, therefore, flattening the curve.