Curve Flattening
A yield-curve move where the SLOPE decreases -- typically short-end rates rising (or falling less) while long-end rates rise less (or fall more). Flattening commonly accompanies Fed hiking cycles (the policy rate drives the short end up while long-end inflation expectations anchor the long end). Sustained flattening sometimes culminates in an INVERSION where short-end exceeds long-end, a historically reliable but imprecise recession signal. At matched duration, a barbell outperforms a mid-curve bullet on a flattening, because the barbell's long leg carries more of its duration than its short leg does -- the long-end rally outweighs the front-end loss. A bullet is close to unaffected by a twist that pivots near its own maturity.
Lessons that use this term
Related terms
10Y Treasury · Altman Z-Score · Asset Sensitivity · Basel III · Bond ETF · Bretton Woods
Open this term in the app → — no account needed; browse the full glossary while you research.