Citi: Driven by short-term debt, the U.S. Treasury yield curve is expected to steepen

ChainCatcher News, Citigroup rate strategists stated in a report that driven by short-term bonds, the U.S. Treasury yield curve is expected to steepen. In a "bull steepener," short-term rates fall faster than long-term rates. The strategists said in a report: "With the risk of rising unemployment increasing due to higher jobless numbers or a continued rebound in labor force participation, we lean toward a bull steepener for 2026."

Therefore, Citigroup strategists believe that the market should have already priced in further rate cuts by the Federal Reserve in the second half of this year, which will keep the 'belly' (i.e., the middle part of the curve) stable. "Against a strong economic backdrop, combined with a dovish Federal Reserve and growing concerns about supply, the yield curve should steepen further."