US Treasury Yields (%)

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The difference between the long and short ends of the yield curve is the smallest it’s been in more than a decade.

The last time it narrowed to this level was in 2007 just as the stock market was reaching its pre-crisis apex. Before that, it was in 2000 when the stock market hit its tech-bubble peak.

There are of course differences between then and now. The yield curve was higher then. Central bank balance sheets were a tiny fraction of what they are today. The stock market traded at a lower multiple in 2007 and a much higher one in 2000.

The world has changed in other ways too. In 2007 Netflix was just launching its movie streaming service and the “App Store” hadn’t opened yet. In 2000 the first iPhone was still seven years away and Mark Zuckerberg was just 16 years old.

In an historical “blink of an eye,” technology has profoundly changed the way we live, communicate and think. Amidst a shift so foundational, it seems unlikely that economic fundamentals would be immune.

So is the convergence of rates different this time around? Undoubtedly. How, exactly? We’ll have to wait and see.

Unless otherwise noted, data is sourced from Bloomberg.
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