Quarles: yield curve flattening not “likely” a signal of recession
Flattening is due to lag in pass-through as short-term rates rise, says Fed vice-chair
The flattening of the US interest rate yield curve in the past year is unlikely to herald an oncoming recession, even if the yield curve should invert, according to Federal Reserve vice-chairman for supervision, Randal Quarles.
The spread between 10-year and two-year Treasury bond yields has narrowed sharply over the past 12 months to as little as 50 basis points in January 2018. Such a move is described as a curve ‘flattening’ – and should yields for longer term securities fall beneath those
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