Everything You Need To Know About Yield Curve Regimes

Yes, we know that yield curves are boring and for the nerds…

But when you hear people say “what is the bond market telling us?” isn’t there some part of you that wants to know wtf they’re on about?

Guess what? You’re in luck!

We promise to keep it as light as possible AND there’s a fantastic TradingView indicator at the bottom of this post to help you monitor these regimes.

PLUS a video explaining how to apply these regimes way beyond bond markets (bonds are only traded by people you’d never want to meet in dark alleys or at parties)

First up, we need the definitions.

What’s a yield curve anyway?

A yield curve is a graphical representation of the relationship between bond yields and their maturities, typically for government bonds.

Why does it matter?

It provides insights into market expectations for economic growth, inflation, and central bank policy. The shape of the yield curve: upward-sloping, flat, or inverted offers critical signals about the state of the economy.

When does it matter most?

When regimes change!

Changes in the curve's slope are classified into four main regimes: bull steepening, bear steepening, bull flattening, and bear flattening.

Each regime reflects different economic conditions and central bank actions.

They offer clues to the outlook that can help us decide when to press the accelerator to the floor, when to hit the brakes and everything in between.

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