Wall Street Sees Treasuries Yield Curve Flattening Into 2019
- Survey shows average 2s-10s spread forecast of 11 bps by June
- Bond-market slide not enough to derail most flattening calls
Photographer: Brendan Smialowski/Bloomberg
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This month’s bond-market slump hasn’t jolted the majority of Wall Street strategists from one core view: that the Treasuries yield curve will keep flattening well into next year.
Strategists at most of the Federal Reserve Bank of New York’s primary dealers expect the spread between 2- and 10-year yields to narrow through the first half of 2019, according to yield forecasts compiled by Bloomberg. From about 30 basis points now, the average prediction is for the gap to shrink to 21 basis points by year-end, and to about 11 basis points by June. Still, it may be a bumpy ride, with forecasts for mid-2019 ranging from a 30 basis point inversion to a positive slope of a half-point.