A More Commodious Curve
2025-02-03 13:55:00 ET
Summary
- Through 2023 and 2024, the spread between bond yields and cash rates was persistently and sometimes deeply negative.
- Two years with an inverted yield curve changed the incentives, psychology and behavior of fixed income markets.
- The return to a normal yield curve makes the broader market dynamics more hostile to short sellers again, and much more friendly to bond buyers.
By Ashok Bhatia, CFA
By fundamentally changing incentives, a normalizing yield curve makes the bond market much more friendly to investors....
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