Treasury yield curve flattens, 2-yr relatively resilient

Steepening of the yield curve following the Bank of Japan rate decision has been undone following the FOMC rate decision.

The yield curve appears to have flattened in Asia as the 2-yr yield traded flat around 0.78%, while the 30-yr, 10-yr yields traded five basis points and three basis points respectively.

It is worth noting that the two-year yield was steady around 0.80% ahead of the FOMC rate decision, which means the subsequent drop has been negligible.

The flattening of the yield curve represents rising short-term rate hike expectations/inflation expectations or upcoming slowdown in the economy. Moreover, Fed did hint at a rate hike in December, while revising economic forecasts lower.