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The U.S. Yield Curve: The Steepening Trend Is Not Over – April 21, 2025

A just-published report examined the longer-term consequences of the U.S.-led trade war. Investors are realizing that this war is a massive policy mistake that will weaken the U.S. economy and sustain downward pressure on U.S. asset prices, including the U.S. dollar.

The recent spike in Treasury yields and plunge in the U.S. dollar was historically abnormal during periods of equity market weakness, and a warning of brewing sovereign debt strains. One manifestation of these concerns has been the steady steepening of the U.S. yield curve, particularly at the very long end of the curve. The danger is that more investors will become progressively less willing to buy Treasurys.

Foreigners still own a huge amount of Treasurys at a time when the new supply of U.S. government debt is expecting to continue increasing – rapidly! We recommend staying positioned for a steeper U.S. yield curve.