The yield curve is said to steepen when the spreads between short-term and long-term rates increases. The yield curve flattens when spreads shrink.

  • A bearish steepener occurs when rates are rising and long-term yields are rising more than short-term rates. Spreads widen.
  • A bullish steepener occurs when rates are falling and short-term rates are falling faster than long-term rates. Spreads widen.
  • A bullish flattener occurs when rates are falling and long-term rates are falling faster than short-term rates. Spreads narrow.
  • A bearish flattener occurs when rates are rising and short-term rates are rising faster than long-term rates. Spreads narrow.

The terms bearish and bullish refer to capital gains (bullish) or losses (bearish) if one is invested in government bonds.

Bearish Steepener Meaning

A bearish steepener is generally a sign that market participants believe the economy is getting stronger and the Fed (Central Bank), will be hiking rates faster than previously anticipated or more than anticipated.

What Happened Today?


  1. The housing market was stronger than expected: Housing Starts Jump More Than Expected: Economy Overheating?
  2. The current account deficit shrank more than expected: Current Account Deficit Shrinks Due to Hurricanes

June Rate Hike Odds

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  • The Fed Funds rate is currently 1.25% to 1.50%
  • The odds of two quarter point hikes through the June meeting increased from 32.5% yesterday to 38.1% today. This is consistent with the bearish steepening of the yield curve.

I did not believe the Fed would hike as much as expected in 2018, and today does not change my mind.

Mike "Mish" Shedlock

Yield Curve Bear Steepener?

Minyanville Prof. Bennet Sedacca is writing about the Bear Steepener.

In Search of the Allegedly Steepening Yield Curve

There has been a lot of commentaries recently about the steepening yield curve. Let's investigate with pictures.

Yield Curve Steepens but Recession Risks Haven't Faded

The yield curve has steepened considerably in the past month. Some think it means recession risk has diminished.

Treasury Yields Surge, Curve Steepens, 30-Yr Yield Highest Since 2012: 6 Reasons

Treasury yields blasted higher today and the curve steepened as well. Let's investigate why.

Yield Curve Steepening and Flattening: It Depends on Where One Looks

Some claim the yield curve is flattening, others say steepening. The steepening side has more merit starting January 2.

Debate over the Yield Curve: Is it Steepening or Flattening?

A recent Wall Street Journal story stated that “A flattening of the Treasury yield curve in 2017 is a worrying sign for investors banking on resurgent U.S. inflation and growth.”

Yield Curve Flattens Dramatically, Looking Quite Recessionary

Curve Watchers Anonymous has been watching the yield curve flatten for months on end.

What Will the Yield Curve Look Like if the Fed Hikes in Dec and March?

Futures positions imply a 92% chance the Fed will hike in Dec and 50% again in March. How will the yield curve respond?

What Spot in the Yield Curve is Likely to Invert First?

The yield curve has flattened considerably over the last year. Will it invert? Where? The following chart explains.