What’s Going On? Huge Moves in the Yield Curve This Year

The U.S. Treasury yield curve has shifted from steeply inverted in May to nearly flat and is now steepening again. This unusual pattern, resembling an inverted double hump, suggests mixed market expectations about a potential short recession followed by inflation, risk aversion, or doubts about the Federal Reserve’s control. The current shape of the yield curve raises concerns about the sustainability of U.S. federal debt and the temporary nature of recent inflation declines.