Bear steepener

Bear steepener is visible on chart showing yield curve. It is a widening spread between long-term and short-term rates. The yield curve presents yields of the bonds of similar quality against their maturities. In normal situation the curve slopes upward. In such situation bonds with short-term maturities have lower yields than long-term ones. That is called normal yield curve.

Bear steepener happens when interest rates on long-term bonds are rising faster than rates on short-term bonds. The change is driven by long-term bonds. In similar case, when the change is driven by short-term bonds, it is called a bull steepener.

The bear steepener happens when increase of inflation is predicted or investors are pessimistic about the stock prices.

References

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