Chart of the Week: Yield Curve, 2002 versus 2006

Wednesday, April 12, 2006 | 09:45 AM

In 2002, the Yield Curve was extremely steep, with short term rates at half century lows. This was extremely stimulative to economic growth. Money was cheap, the carry trade was in full swing, and the Real Estate market was just beginning to accelerate.


Yield Curve, 2002 versus 2006


Sources: StockCharts


In December, the yield curve was inverted, and today, it is flat. The Fed finally got its wish, with the long bond responding to increased Fed Fund rates. We wouldn’t be surprised if the curve ends up steepening as traders sell the longer dated bonds.


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Note:  This was part of a larger research piece that was emailed to institutional clients on April 11, 2006 at ~10:00am


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