Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MORGAN STANLEY

(MS)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

Explainer-What is the Treasury yield curve and what is it telling us?

06/23/2021 | 01:45pm EDT
FILE PHOTO: The Federal Reserve Board building on Constitution Avenue is pictured in Washington

(Reuters) - A hawkish shift from the U.S. Federal Reserve last week has focused attention on the shape of the yield curve. Here's a short primer explaining what the yield curve is and how its shape may reflect expectations of the economy's trajectory.

WHAT IS THE U.S. TREASURY YIELD CURVE?

It is a plot of the yields on all Treasury securities ranging from one-month bills to 30-year bonds.

Normally, it has an arcing, upward slope because investors expect more compensation for taking on the added risk of owning government debt as maturities grow longer. That means a 30-year bond would yield much more than a one-month bill or five-year note. Bond yields move inversely to prices.

WHAT IS A STEEP OR FLAT YIELD CURVE?

If the gap between yields on shorter-maturity and longer-term debt, as measured in basis points, widens substantially, the yield curve is called steep. That could signal expectations of higher economic growth and inflation.

A contracting gap indicates the curve is flattening with smaller yield differentials between short- and long-term debt. This is a possible indicator of factors like economic uncertainty, easing inflation concerns, and anticipation of tighter monetary policy.

WHAT HAPPENED TO THE YIELD CURVE AFTER LAST WEEK'S FEDERAL RESERVE MEETING?

A majority of Fed policymakers shifted their projections for the first interest rate hike into 2023 amid signs of accelerating inflation, surprising markets and sparking a sharp rise in yields on two- and five-year notes, which are the most sensitive to interest rate changes.

Long-term yields subsequently fell, flattening the yield curve between five-year notes and 30-year bonds, with the gap shrinking to its narrowest since August 2020 on Monday.

Research by Morgan Stanley found that this so-called "bear flattening", which it defines as denoting a "strengthening recovery" that "leads the market to price in more policy tightening" occurs in the middle of an economic cycle and has tended to be comparatively bullish for stocks and the dollar.

Other yield curve phases are "bear steepening," which denotes early-cycle confidence about longer-term economic growth even as short-term rates remain low; "bull flattening," which points to late-cycle economic strength leading to tighter economic policy and increased fears of an approaching downturn; and "bull steepening," when a downturn occurs and economic confidence ebbs despite aggressive central bank policy easing, according to Morgan Stanley.

(Reporting By Karen Pierog in Chicago; Editing by Ira Iosebashvili and Andrea Ricci)

By Karen Pierog


© Reuters 2021
All news about MORGAN STANLEY
07/30US Stocks Retreat as Amazon Drops on Third-Quarter Guidance; PCE Inflation La..
MT
07/30CLOSE UPDATE : US Stocks Retreat as Amazon Drops on Q3 Guidance; PCE Inflation L..
MT
07/30Top Midday Decliners
MT
07/30ALLIANCE DATA : Morgan Stanley Adjusts Alliance Data Systems' Price Target to $1..
MT
07/30KLA : Morgan Stanley Adjusts KLA's Price Target to $389 from $364, Keeps Equalwe..
MT
07/30ATLASSIAN : Shares Rally Following Q4 Results Beat, Price Target Upgrades From A..
MT
07/30ATLASSIAN : Morgan Stanley Adjusts Price Target on Atlassian to $320 From $292, ..
MT
07/30VERTEX PHARMACEUTICALS : Morgan Stanley Adjusts Vertex Pharmaceuticals' Price Ta..
MT
07/30Morgan Stanley Adjusts Comcast's Price Target to $72 From $70, Keeps Overweig..
MT
07/30YUM BRANDS : Morgan Stanley Adjusts Yum! Brands' PT to $141 from $127, Keeps Ove..
MT
More news
Financials (USD)
Sales 2021 57 306 M - -
Net income 2021 13 180 M - -
Net Debt 2021 114 B - -
P/E ratio 2021 13,2x
Yield 2021 2,15%
Capitalization 176 B 176 B -
EV / Sales 2021 5,07x
EV / Sales 2022 5,07x
Nbr of Employees 71 000
Free-Float 72,7%
Chart MORGAN STANLEY
Duration : Period :
Morgan Stanley Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends MORGAN STANLEY
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 29
Last Close Price 95,98 $
Average target price 99,86 $
Spread / Average Target 4,04%
EPS Revisions
Managers and Directors
James Patrick Gorman Chairman & Chief Executive Officer
Andrew Michael Saperstein Co-President
Edward N. Pick Co-President
Sharon Yeshaya Chief Financial Officer
Robert P. Rooney Head-Technology, Operations & Firm Resilience
Sector and Competitors