Treasury yield curve steepens in Asia

Treasury yield curve steepened in Asia even though the December Fed rate hike bets remained largely unchanged around 70%.

At the time of writing, the 10-yr yield traded one basis point higher on the day. Meanwhile, 30-yr yield traded 1.2 bps higher. The two-year yield, which represents short-term rate hike bets, traded unchanged on the day.

A flatter yield curve usually represents rise in short-term rate hike bets, while a steeper yield curve represents long-term inflation expectations. Moreover, a steeper yield curve in Asia goes down well the fact that the difference between yields on regular Treasuries and inflation-protected debt, a measure of the outlook for consumer prices known as the break-even rate, closed at the highest since May on Friday.

The focus today is on the US consumer price inflation data and action in the equity markets.