Something important is happening in the U.S. Treasury market — and most investors are looking the other way.
Over the past couple of weeks, yields have dropped sharply. The 10-year Treasury has fallen toward the 4% level. The two-year yield has made a new multi-month low. The long end is moving lower. The short end is moving even faster.
Technically, this is called a bull steepener.
But despite the name, there’s nothing particularly “bullish” about what’s unfolding.
In fact, the bond market is sending a message that growth expectations are deteriorating, inflation fears are fading, and financial risks are building beneath the surface. Stocks may still be elevated. Risk assets may still be trading as if the expansion is intact. But the yield curve is telling a very different story.
Let’s break down what’s happening — and why it matters far more than most people realize.
The Move in Yields: A Clear Shift in Narrative
In just a matter of weeks, Treasury yields have fallen meaningfully:
This isn’t a minor fluctuation. A 25-basis-point move in
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