Another Reminder Fed May Not Fear Yield Curve Flattening

It may be merely coincidence, but a few days after Chair Powell downplayed the yield curve beyond the first 18 months as a recession indicator (and downplaying 2s10s in particular), Fed staffers have published "(Don't Fear) The Yield Curve, Reprise":

• If nothing else, it's further evidence against the idea that the FOMC will reconsider its tightening path should the curve invert further out.
• From the paper: "Especially in the present circumstances when the 2-10 spread is very much out of step with the near-term forward spread, which offers a much more precise view of market expectations over the next year and a half, it is difficult to concoct a reason to be concerned about the flattening of the 2-10 spread. In contrast, if and when the near-term spread does contract, we know that investors will then be expecting a cessation in monetary policy tightening."