Flat Yield Curve

A flat yield curve is a specific market condition where the yields on short-term and long-term debt instruments, such as U.S. Treasury securities, are nearly identical, signaling a period of economic transition or uncertainty. This phenomenon occurs when the spread between a short-term benchmark (e.g., 2-year Treasury) and a long-term benchmark (e.g., 10-year Treasury) approaches zero, suggesting that investors anticipate lower future interest rates or slower economic growth.