Yield Curve Steepening

Yield curve steepening means the gap between long-term yields and short-term yields is increasing. In simple terms, long-term rates are rising more than short-term rates, or short-term rates are falling more than long-term rates. Yield curve steepening is important because it can signal changing expectations about growth, inflation, or central bank policy. A steepening curve may suggest investors expect stronger future growth or higher long-term inflation. For example, if the 10-year Treasury yield rises while the 2-year yield stays flat, the yield curve may steepen. Yield curve steepening is not always bullish. It can happen for positive growth reasons, but it can also happen because investors demand more compensation for long-term risk.