Nov. 18 at 10:30 AM
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“The combination of lower short-term interest rates and higher long-term interest rates would steepen the yield curve back into some kind of healthy position, after years being nearly flat or inverted. Higher long-term interest rates, including higher mortgage rates, could also have a dampening effect on inflation.”
I’ve been stating for 12+ months that the 200 basis point spread would form.
It’s normal.
I said 3-4-5
Now, its possible we see the spread move to
2 year 3.5%
10 year 4.5%
30 year 5.5%
As mentioned in this article, by continuing to off load the FED balance sheet and with bloated government spending, people will want to get paid to hold longer term debts.
When the next recession occurs, we will see the 2 year move to 2%, but the 10 and 30 will remain elevated.
I wouldn’t be surprised to see a 250-300 point spread.
https://wolfstreet.com/2025/11/17/another-sign-a-major-rethink-of-the-size-of-the-feds-balance-sheet-is-gaining-momentum/
