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Bear‑Steepening

Trading Term

Bear‑steepening refers to a change in the yield curve where long‑term interest rates rise faster than short‑term rates, causing the curve to become steeper. The term “bear” signals that bond prices are falling (since yields rise when prices fall).

What it usually indicates:

  • Markets expect higher inflation, stronger growth, or more government borrowing in the future.
  • Investors demand higher yields to hold long‑term bonds.
  • Short‑term rates may rise slightly or remain anchored by central bank policy, while long‑term rates move up more sharply.

Why it matters:

A bear‑steepening curve often reflects tightening financial conditions and can influence borrowing costs, mortgage rates, and equity valuations.

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