Bear Flattener


DEFINITION of 'Bear Flattener'

A yield-rate environment in which short-term interest rates are increasing at a faster rate than long-term interest rates. This causes the yield curve to flatten as short-term and long-term rates start to converge.

BREAKING DOWN 'Bear Flattener'

At any time, the yield curve is either in a state of steepening or flattening. These fluctuations occur due to investor demand, change in interest rates, and institutional investors trading large blocks of fixed-income securities.

If the curve is flattening, the spread between long-term rates and short-term rates is narrowing. A bear flattener often occurs when the government raises interest rates in the short term. Increasing interest rates drives short-term bond prices down, increasing their yields rapidly in the short term, relative to long-term securities.

  1. Bull Steepener

    A change in the yield curve caused by short-term rates falling ...
  2. Bull Flattener

    A yield-rate environment in which long-term rates are decreasing ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, ...
  4. Normal Yield Curve

    A yield curve in which short-term debt instruments have a lower ...
  5. Bear Steepener

    A widening of the yield curve caused by long-term rates increasing ...
  6. Maturity

    The period of time for which a financial instrument remains outstanding. ...
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