Long-End Treasuries Outperform as Market Prices In Fed Hike Premium

The twist flattening is notable because it signals the market is treating near-term Fed tightening as a growth and inflation drag rather than a reflation impulse — front-end yields rise on hike expectations while long-end yields fall on weaker forward outlook. That divergence matters most for duration-sensitive borrowers and for anyone funding at the short end, since the cost of near-term money and the price of long-term risk are moving in opposite directions. Whether the long end keeps rallying into the remaining Fed meetings, or the hike premium eventually spills further out the curve, is the open question.