How collateral scarcity reshaped the US yield curve

QE and demand for high-quality liquid assets have suppressed short-term rates, argue IMF economists


We all have been taught that short-term policy rates drive the whole yield curve – specifically, that market expectations about the future path of the overnight federal funds rate are reflected in 10-year yields and beyond.

In recent years, that transmission mechanism has broken down, with policy rate hikes not percolating to the long end of the yield curve. Since the US Federal Reserve’s liftoff in December 2015 from zero to 2.5%, the 10-year Treasury yield actually declined from 2.30% to 2.06

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to View our subscription options


Want to know what’s included in our free membership? Click here

This address will be used to create your account

Digging deeper into deep hedging

Dynamic techniques and gen-AI simulated data can push the limits of deep hedging even further, as derivatives guru John Hull and colleagues explain

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here