Federal Reserve puzzled by yield curve steepening
http://www.reuters.com/article/wtUSI...54U1NZ20090531
By
Alister Bull - Analysis
WASHINGTON (Reuters) - The Federal Reserve is studying significant moves in the U.S. government bond market last week that could have big implications for the central bank's strategy to combat the country's recession.
But the Fed is not really sure what is driving the sharp rise in long-dated bond yields, and especially a widening gap between short and long term yields.
Do rising U.S. Treasury yields and a steepening yield curve suggest an economic recovery is more certain, meaning less need for safe haven government bonds and a healthy demand for credit? If so, there might be less need for the Fed to expand the money supply by buying more U.S. Treasuries.
Or does the steepening yield curve ...
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http://www.reuters.com/article/wtUSI...54U1NZ20090531
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