By Bradley Krom
While the shape of global yield curve is generally relegated to the purview of fixed income strategists and economists, many investors are now starting to take note of not only the level of interest rates, but also their relative slope. Below, we review the trends in the shape of global yield curves and discuss potential implications for markets going forward.
As illustrated in the chart below, since June 2015, global developed market yield curves (as measured by the difference between the 2-year maturity and the 10-year maturity) have flattened. Generally speaking, a yield curve implies the economy may be slowing and investors should take notice. Below, we highlight our key takeaways for global markets across the developed world.
Developed Market Yield Curves, 3/31/1995-9/16/2016
(click to enlarge)
Implications for Global Growth
For many strategists, the shape of the yield curve is often used as a proxy for real…