Why the yield curve is flattening: investment implications

Recession? No. Rate hikes? Yes. While a flat or inverted yield curve has sometimes predicted the end of a growth cycle, we believe the current U.S. expansion is alive and kicking. From this perspective, the flatter shape of the curve looks more indicative of today’s economic heat wave (and a nod to the near-certainty of associated Fed rate hikes) than of a cold snap farther down the road.