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.
- Konstantinov, G. (2016). Capturing short-term and long-term alpha of global bond portfolios: evidence from EUR-investors’ perspective. Financial Markets and Portfolio Management, 30(3), 337-365.
This is an article stub.