The Bear-Steepener: When the Bond Market Disagrees With Itself Across Maturities
On a day the Fed holds into a war-driven oil shock, the yield curve can do something that looks contradictory: the 2-year falls while the 10- and 30-year rise. That is a bear-steepener, and it is the bond market disagreeing with itself across maturities, the front end trusting the Fed for now, the long end pricing inflation it does not trust the Fed to contain. Here is what the shape actually means.