Glossary
Bear Steepener
A bear steepener is a shift in the yield curve where long-term interest rates rise faster than short-term rates. It usually signals expectations of higher inflation or tighter monetary policy and is called “bear” because it often reflects a bearish outlook on bonds (falling prices, rising yields).
What causes a bear steepener?
It’s typically caused by rising inflation expectations, strong economic growth, or fears of aggressive central bank tightening—leading investors to demand higher long-term yields.
How does a bear steepener affect bonds?
Bond prices fall, especially long-term bonds, since rising yields reduce the present value of future payments. This can hurt bond portfolios with longer durations.
How is a bear steepener different from a bull steepener?
In a bear steepener, yields rise—especially at the long end of the curve. In a bull steepener, short-term yields fall more than long-term yields, often during economic slowdowns or rate cuts.
What does a bear steepener signal for the economy?
It may indicate expectations of inflation or tightening monetary policy, often leading to concerns about borrowing costs and future economic cooling.
Who watches bear steepeners?
Fixed income investors, economists, and central banks monitor yield curve movements like bear steepeners to assess interest rate trends and economic sentiment.
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