Bond market greets Powell appointment with potentially ominous signal
New York — President Donald Trump’s nomination of Jerome Powell as the next Federal Reserve chair on Thursday was greeted with a potentially ominous signal from the bond market: the US treasury yield curve flattened. Trump formally confirmed his selection of Powell, a 64-year-old Fed board governor and former investment banker to succeed current Fed chief Janet Yellen, whose term expires in February. The shape of the treasury yield curve, which plots the yields of the various debt securities issued by the US government, often reflects investors’ perceptions of the health of the economy and the outlook for inflation. A steeper curve, when long-term yields rise relative to shorter-dated yields, typically augurs brisker economic growth and inflation. A flatter one, when the gap between short- and long-term yields narrows, most often occurs as the Fed is raising short-term interest rates as it is now, and signals a muted outlook for both growth and inflation. Bond investors are gearing ...
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