Filter by Categories

Yield Curve Watch: Bull, bear, steeper, flatter? Here is what the data suggests

We launch our Yield Curve watch series with an editorial of the prospects for the curve. Is steepening on the cards? And is bull- or bear steepening most likely from here? Here is the data!
2023-08-08

Welcome to our Yield Curve Watch series.

Over the next few days, we will assess all asset classes in relation to the yield curve dynamics and back-test what works and what doesn’t work in various curve regimes.

As most of you have probably noticed by now, we see the steepening case as increasingly compelling from a macro perspective as (What a great day to write that with material bull-flattening across the board)

1) The issuance profile will move towards longer durations

2) The Manufacturing rebound was driven by an input cost decline (see chart 1)

3) The BoJ decision has decreased Japanese incentives to buy USTs (see chart 2)

4) Positioning is already loaded with duration

5) Headline inflation will likely increase (bull market in commodities) paired with declining core inflation in annual terms

The flattener case will only continue to work if central banks re-accelerate the tightening cycle amidst falling core inflation, which we find unlikely given the recent signal sent by the Fed and the ECB.

Chart 1: Lower input costs -> rebound in Manufacturing -> Steeper curve

We launch our Yield Curve watch series with an editorial of the prospects for the curve. Is steepening on the cards? And is bull- or bear steepening most likely from here? Here is the data!

0 Comments

STENO RESEARCH IS JOINING REAL VISION

From July 2025, Steno Research is joining Real Vision to create the ultimate macro research product for you!

As a subscriber, this means the following:

Yearly subscriber: For legal reasons, we cannot transfer your pre-paid subscription directly. You need to register with Real Vision and then we’ll transfer your pre-paid subscription quickly afterwards. Simply go to https://www.realvision.com/free and sign up - and then we’ll take care of the rest! We will shut down service of Steno Research on July 31st, so be sure to make the transfer to keep receiving our content.

Already a RV subscriber?
Please check that you are using the same e-mail. If yes, you don't need to do anything. If not, please contact [email protected].

Monthly subscriber: Your current monthly subscription with Steno Research will end during July (31st at the latest). To continue accessing our research (and more), you’ll need to sign up for a Real Vision membership. Check out your options on: https://www.realvision.com/pricing

For Institutional Clients:
- Your access has been moved to our new institutional offering at NowcastIQ.com
- If you haven’t been moved already, please contact [email protected]