Yield curve still signaling positive future growth

Sources: Bloomberg, and Wells Fargo Investment Institute. Monthly data from January 1, 1978 to September 30, 2021. For illustrative purposes only. Ten-Year Treasury Constant Maturity and the One-Year Constant Maturity Indexes are published by the Federal Reserve Board and are based on the average yield of a range of Treasury securities, all adjusted to the equivalent of a 10-year maturity and the equivalent of a one-year maturity. Shaded area represents time frame of a U.S. economic recession. Yields represent past performance and fluctuate with market conditions. Current yields may be higher or lower than those quoted above. Past performance is no guarantee of future results. 100 basis points equal 1%. Although Treasuries are considered free from credit risk they are subject to other types of risks. These risks include interest rate risk, which may cause the underlying value of the bond to fluctuate.

Key Takeaways

  • A steepening yield curve has historically pointed to an uptick in economic growth.
  • The yield curve usually reaches peak steepness, on average, 20 months after a recession.
  • Short-dated yields remain anchored by the Federal Reserve’s interest rate policy, while intermediate and long-dated yields have climbed from last year’s lows on better growth and inflation prospects.