The following depicts the spread in Treasuries for the 3 month and 10 year securities. We fist plot the spread in basis points and then as a percent of the 10 year.
The one below is the spread in basis points. Note that the spread is increasing at a rapid rate in the past few weeks. This is a reasonable estimator of pending inflationary pressure on the tail. There have been spikes before but we see what appears to be a growing trend. Thus may portend the growth in the long term rates despite the attempts by the FED to keep the short term rates down. The yield curve has a significant upward slope at this time and we anticipate it increasing.
The following is spread in percent. This normalization may have some use in future analysis.
The one below is the spread in basis points. Note that the spread is increasing at a rapid rate in the past few weeks. This is a reasonable estimator of pending inflationary pressure on the tail. There have been spikes before but we see what appears to be a growing trend. Thus may portend the growth in the long term rates despite the attempts by the FED to keep the short term rates down. The yield curve has a significant upward slope at this time and we anticipate it increasing.
The following is spread in percent. This normalization may have some use in future analysis.
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