CLTL - More Widening Spreads
Editor's note: This article was originally published on June 5 by Menzie Chinn here.
Spreads relative to 3 months continue to decline.
Source: BondSuperMart.com. On the run yields.
In other words, despite interruptions, key term spreads are declining even as economic policy uncertainty increases (constant maturity yields):
Figure 1: Treasury 10yr-3mo spread (blue, left scale), 10yr-2yr (red, left scale), 5yr-3mo (teal, left scale), in %; and Economic Policy Uncertainty index (black, right scale). Source: Fed via FRED, US Treasury, and policyuncertainty.com, accessed 6/5/2019.
A longer-term perspective highlights the inexorable nature of the term