FLAT Has Your Back Amid Flattening Yield Curve

There’s been a lot of talk recently about a flattening yield curve, a condition where the yields on short-term and long-dated Treasuries converge.  This is especially bad news for banks because a major source of profits for money-center banks is the ability to borrow money at short-term rates and lend at long-term rates.  When the yield curve is steep – that is, when long-term rates are much higher than short-term rates – banks can make some tidy profits.  When the yield curve flattens, the banking business can turn ugly. One could argue that a flat yield curve will force banks to make more and riskier loans.  In addition, consumers and business owners will want to borrow more because the terms are more favorable.  But this doesn’t seem to be happening. …