Скачать или смотреть Net Your Father's Steepening: Term Premium Returns Without the Fed's Blessing

The spread between the 10-year U.S. Treasury note yield and the effective federal funds rate has widened markedly since Trump got re-elected. But, unlike prior inversion episodes where long-end yields stayed low due to growth pessimism, the recent sharp steepening — driven by rising 10-year yields while the Fed holds policy steady — signals a repricing of long-term fiscal risk, supply imbalances and term premium resurgence.

Rather than reflecting confidence in future growth, the widening spread underscores the breakdown of post-GFC yield suppression mechanics, with markets demanding higher compensation for duration amid ballooning Treasury issuance and diminished foreign demand.

This marks a structural divergence from past cycles, where steepening typically coincided with rate cuts. Today’s steepening is disorderly, policy-agnostic and symptomatic of a market wrestling with a new regime of fiscal dominance and bond market fragility.