The US and global yield curves steepened briefly last summer and steepened further after
Trump’s election, but it has been rolling over almost all year. This has a negative read
through to growth and key risk assets.

The yield curve is one of the key things we track to provide a lead on economic growth.
The US yield curve and a global composite yield curve provide a lead on credit spreads,
commodity prices, corporate profits, etc.

The top chart shows that the yield curve provides a good three year lead on credit spreads.
The flattening we have seen points to wider credit spreads. Likewise, as you can see
from the bottom-left chart, a flatter yield curve has historically been associated with lower
commodity prices, and a lower ISM. The bottom-right chart shows that flatter yield curves
have been associated with a fall in S&P 500 EBIT (click on image to enlarge).

Source: Bloomberg, Macrobond and Variant Perception