BTC Vs US02US30 SPREAD - Interesting

5 Okt 2023

• 2s30s spread: The US2US30 spread refers to the yield spread between the 2-year and 30-year U.S. Treasury bonds. The chart visualizes the difference, or spread, in yield for these two bonds over time.

The 2-year bond represents more of the short-term outlook, whereas the 30-year bond is more indicative of long-term expectations. So, when people refer to the US2US30 yield spread, they're essentially talking about the difference between short-term and long-term interest rates.

During typical economic conditions, investors demand higher interest for lending money over a longer period, thus the yield of 30-year bond is higher than the 2-year. However, during economic uncertainty, the spread can narrow or even become negative (also known as a yield curve inversion), which can be viewed as a potential indicator of a forthcoming economic recession.

Yield Curve:
1. A yield curve is a graphical representation of the yields available for bonds of equal credit quality and different maturity dates. It is used to measure bond investors' feelings about risk and can significantly impact investment returns.

2. Different types of yield curves can exist reflecting the short, intermediate, and long-term rates of various bond types, such as Treasury bonds, Municipal bonds, or corporate bonds of specific issuers.

3. The shape of the yield curve varies: a normal yield curve slopes upward indicating higher yields for long-term investments; a steep curve usually signals the beginning of economic expansion; an inverted curve suggests potential economic slowdown as long-term investors settle for lower yields; and a flat or humped curve indicates little difference in short and long-term yields.

4. The yield curve can help gauge the direction of the economy, serving as a predictor for potential turning points in the economy.

5. Yield curves allow bond investors to compare Treasury yields with riskier assets such as Agency bonds or corporate bonds. The yield difference between these is referred to as the "spread", which widens during recessions and contracts during recoveries.