Yield Curve: Is It Different This Time?

Maybe it's due to a global savings glut. Or perhaps fear continues to lurk in the hearts of overseas investors, inspiring a constant flow into safe-haven Treasuries in spite of firmer economic activity. Whatever the explanation, the yield curve data of late looks out of place relative to the state of US economic affairs. Growth has picked up and the near-term risk of a new recession has been virtually nil recently. Yet the conspicuous flattening of the yield curve over the past year suggests that macro danger is approaching.