The yield curve has flattened slightly since last month. Short rates have fallen a mere nine basis points, but long rates have fallen more: The 3-year, 3-month spread has slipped from 101 to 94 basis points, and the 10-year, 3-month spread has dropped from 122 to 107. The curve retains its recent hump shape, with 7-year rates higher than 10-year rates. Interestingly enough, a yield curve of real rates based on Treasury inflation-protection securities (TIPS) shows no hump at all between five and 10 years. This may suggest some market concern about inflation at intermediate horizons.
Suggested citation: "Interest Rates," Federal Reserve Bank of Cleveland, Economic Trends, no. 99-08, pp. 06, 08.01.1999.