Real interest rates are negative going out 10 years on the Treasury bond yield curve.
With a flat bond yield curve and oil quots moving lower, the oils are in for a tough year.
The sudden swing to hawkishness, which emerged in speeches delivered since the January meeting, helped push the domestic yield curve up and bond prices down as markets started to price in higher rates in the future.
They found that it made sense to buy long bonds in almost all interest-rate scenarios but one: when rates are low (so the risk that they will revert to the mean, thus undercutting the value of the bond, is high) and the yield curve a line drawn through the interest rates on government securities with different maturities is flat (so there is little extra reward for taking that risk).
Mortgages are bumping along at or near multi-decade lows and a flood of Treasury bond buyers has led to a very appealing yield curve for corporate and government borrowers.
It is unnatural to have interest rates close to zero and to distort the yield curve by pegging longer-run bond prices at artificially high levels and suppressing yields.
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His downbeat assessment seemingly interwoven with downright irritation at the mercurial pace of recovery is the latest piece of ammunition for bond bulls looking to exert further downwards pressure on the yield curve.
However, printing money eventually leads to intractable inflation and will send bond yields much higher, especially on the long end of the yield curve.
While the yield curve may sound like a wonkish concept reserved only for professional bond traders, retail investors can now profit from flattening and steepening in the curve, too.
The slope of the yield curve can be measured in varying ways but is conventionally thought of as the long-term government bond rate minus the short-term government bond rate.
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