Here’s why the market is shrugging off a flattening yield curve Here’s why the market is shrugging off a flattening yield curve
22 Hours Ago | 04:10
The yield curve narrowed to its flattest level since before the financial crisis this week.
The difference between the 2-year and 10-year yield fell to below 24 basis points on an intraday basis Thursday morning, the flattest level since August 2007, two months before the S&P 500 began a steep descent to crisis lows.
But any worries a flatter yield curve spells the end of this bull run are premature, says one market watcher.
“The yield curve is rather flat but a flat yield curve is not a message that the rally is over. An inverted yield curve is and we’re just not there yet,” Mark Tepper, president of Strategic Wealth Partners, told CNBC’s “Trading Nation” on Thursday.
An inverted yield curve occurs when shorter-term Treasurys such as 2-year bonds have a higher yield than longer-term Treasurys such as the 10-year note. It is typically seen as a leading indicator of trouble with the economy and stock market.
The yield curve has correctly predicted each of the past seven recessions since 1968, says Tepper. However, a long lead time means this nine-year bull market could have more room to run yet.