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Pay attention to the flattening Treasury yield curve

“Indeed, the Treasury yield curve has shrunk so much that it registered its lowest point in almost a decade, at 75 basis points earlier last week” writes Ivan Martchev for Fed funds rate hikes affect the two-year note yield more, while quantitative tightening affects the 10-year note yield more.The yield curve was never this flat during the tenure of President Barack Obama.The 10-year yield would decline as the fed funds rate rose and the outlook for inflation and economic growth would deteriorate.These fed funds rate hikes came before the balance sheet unwinding — which I characterize as “quantitative tightening,” albeit in baby steps.

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