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📊 Chart of the Week: The yield curve is no longer pricing fast Fed cuts

The US 10Y-2Y yield spread remained positively sloped last week as Treasury yields continued to climb across the curve, with both 10-year and 2-year yields reaching their highest levels in months.

The recent move reflects a market increasingly adjusting to a “higher-for-longer” macro environment:

▪️inflation pressures remain persistent,
▪️oil prices have rebounded sharply,
▪️and resilient economic data continues to delay expectations for aggressive Fed easing.

Unlike previous years, the yield curve is no longer deeply inverted. Instead, bond markets appear increasingly focused on structurally higher long-term rates, elevated term premiums, and the possibility that inflation may remain more persistent than expected.

The key question now:

Are markets beginning to accept that the post-pandemic era of ultra-low yields may be over?

📊 Chart of the Week: Brent vs CPI: Is Inflation Risk Returning?

Inflation had been gradually cooling following the Fed’s aggressive tightening cycle, while oil prices remained relatively contained through most of 2024 and early 2025.

However, the recent rebound in Brent crude, driven by renewed geopolitical tensions and supply concerns, is beginning to reintroduce upside inflation risks just as markets were becoming more comfortable with the disinflation narrative.

The key question now:

Will higher energy prices slow the path toward lower inflation again?