Don't Ignore This Chart!

Never mind QE, the Yield Curve Reflects a Dovish Fed


The end of QE may be on the table, but the yield curve shows that the Fed remains dovish overall. The image below comes from the Dynamic Yield Curve. Notice that short-term yields are the lowest and the yields rise as the maturities extend. This is a "normal" or positively sloped yield curve and it means the Fed is accommodative right now. The trouble starts when short-term yields rise sharply and the yield curve flattens. Click the image below for a live chart and move the vertical red line to 2007 and 2000 to see what a flat yield curve looks like. 

Click this image for a live chart. 

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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