- The yield curve is flattest since 2007
- Long duration treasuries gained (yields dropped) on weak inflation, solid auction demand.
The spread between the US 10-year treasury yield and the 2-year yield, also known as the yield curve, has dropped to 42.79 basis points - the flattest since 2007. Meanwhile, the curve from 5 to 30 years flattened Thursday to the lowest level since August 2007.
The flattening of the yield curve could be associated with a rise in prices (drop in yields) of long duration treasuries after the weaker-than-expected US inflation release. "The core consumer price index up by a weaker-than-anticipated 0.1 percent from March and just 2.1 percent on an annual basis", according to Bloomberg.
Further, the auction of the 30-year bonds worth $17 billion (the largest-ever sale of the maturity) reportedly put a bid under prices, sending long duration yields lower.
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