Markets Closed for July 4th After Dow's Record Close, Chip Slide, and a Hawkish Fed

The Yield Curve (Steepening vs. Flattening)

The yield curve plots Treasury yields across maturities, from short-term bills to the 30-year bond. In normal times it slopes upward: investors demand more yield to lock up money for longer, since that means more exposure to inflation and interest-rate risk. The curve's shape — not just its level — is one of the most closely watched signals in fixed income, because it reflects the market's collective bet on the path of growth, inflation, and Fed policy. A curve 'steepens' when the gap between long-term and short-term yields widens, and 'flattens' or inverts when that gap narrows or reverses. Steepening can happen two ways: short rates falling faster than long rates (a 'bull steepener,' often when the market prices in Fed cuts), or long rates rising faster than short rates (a 'bear steepener,' often when inflation or growth expectations pick up). The distinction matters because the two scenarios imply very different things about where the economy is headed. Today's session is a clean example of a bull steepener. After the soft jobs report, fed funds futures pushed September rate-cut-adjacent bets higher and short-term yields eased, while the 10-year held up near 4.46%, still elevated by recent standards given Fed Chair Warsh's hawkish inflation rhetoric. The bond market is effectively pricing two competing stories at once: a labor market cooling enough to justify easier policy at the short end, and inflation risk sticky enough to keep long-term yields from falling with it.