The yield curve has steepened since last month, as 3- and 6-month rates fell and all others rose. The 3-year, 3-month spread increased from 34 to 56 basis points; the 10-year, 3-month spread grew from 44 to 69 basis points. Some have attributed the steepening to anticipation of a Federal Reserve hike in the federal funds rate. However, it is hard to see how such anticipation would accord with the drop in short rates, since Fed hikes usually flatten the curve. Long rates have risen in sync; the spread between 30-year and 10-year rates has barely nudged up, from 37 to 38 basis points.
Suggested citation: "Interest Rates," Federal Reserve Bank of Cleveland, Economic Trends, no. 99-04, pp. 06, 04.01.1999.