Or just more Fed easing. Or bubbles. Or even a buyers’ strike.

After Tuesday’s FOMC statement, yields did this — from short to long.

The five-year:

And the seven-year:

And the bench-mark 10-year:

And the 30-year — which bucked the plummeting-yield trend:

Are you sensing a pattern yet?

Because bond traders certainly seem to be.

As for the yield curve — there’s a short/long-dated disconnect there too.

On the bench-mark yield curve, the spread between two-year and 10-year yields fell to 223 basis points on Tuesday — indicating the flattest curve in more than a year:

But the difference between 10- and 30-year USTs increased to 124 basis points:

There be . . .  err, confusion.

Related links:
Deflationary fears send Treasuries off the charts – FT
Quantitative nothingness and the yield curve’s reaction – Mish
Credit Suisse’s Garthwaite does QE II – FT Alphaville
‘A lively debate followed,’ or, fun with Treasuries - FT Alphaville

This entry was posted by Tracy Alloway on Wednesday, August 11th, 2010 at 4:27 and is filed under Capital markets. Tagged with 10-year, Deflation, federal reserve, inflation, quantitative easing, US Treasuries, Yield curve. Edit this entry.