The S&P 500 hit a new record above 6,500 for the first time ever yesterday, and futures contracts on the index were down only a little before markets opened this morning in New York, indicating that investors are relatively sanguine about equity valuations being as high as they were right before the dotcom crash of 1999–2002.
Over in the bond and currency markets it’s a different picture. The yield on two-year Treasuries was sitting at 3.635% this morning, and it has been declining all year. The yield on 30-year Treasuries, however, was at 4.904% this morning, and it has been rising all year.
The curve that plots the gap between them over time is rising—and analysts at Convera, an FX payments platform, earlier this week started worrying that this looks like a “twist steepener” or a “bear steepener” in the bond market.
A “bear steepener” implies a bear market for the prices of bonds. (Bond prices move in…
