Head of Commodity Strategy
We begin 2026 with the steepest US yield curve since 2021. That said, it is worth noting that Friday 2 January typically marks a period when many institutional traders have yet to return in full, leaving liquidity thin and price action prone to exaggeration. Early-year moves should therefore be treated with caution, as signals generated during the first couple of weeks may reflect illiquid conditions rather than a fully formed market consensus.
Despite of these liquidity and signal value concerns, the U.S. yield curve has been steadily steepening throughout December, culminating today with the 2–30 year spread trading around 139 basis points, while the more closely watched 2–10 stands near 70 basis points. While the the inversion of 2022–24 was driven by aggressive front-end tightening and recession fears. The current steepening, reflects a different mix of forces: expectations that policy rates will ease over time, combined with a long end that remains elevated due to rising term premia, heavy issuance, and lingering inflation and fiscal uncertainty. This distinction matters because it changes how the curve interacts with risk assets and safe havens.
For equities, this creates a more selective environment. Higher long-term discount rates cap valuation multiples, particularly for long-duration growth stocks. By contrast, sectors with near-term cash flows, pricing power and tangible assets tend to fare better. In other words, the curve is supportive for risk, but less forgiving than in past easing cycles.
Traditionally, rising long-end yields have been a headwind for safe-haven assets such as gold, silver and platinum, however that relationship has become less reliable following a breakdown in the historically strong negative correlation between gold and US long-end real yields. The aggressive tightening cycle from 2022 would, on paper, have been deeply negative for gold as real yields surged. Instead, prices proved resilient as geopolitical fragmentation—most notably Russia’s invasion of Ukraine and the freezing of Russian FX reserves—reshaped how many central banks assess reserve risk and accelerated demand from non-Western buyers less focused on yield dynamics. Against this backdrop, the current curve steepening reflects fiscal strain, sticky inflation risks and long-term policy credibility rather than pure growth optimism. As a result, higher long-end yields need not be a headwind for non-yielding hard assets, underlining why the 2–30 curve has become a more relevant signal for safe-haven investors. Why safe-haven investors should care just as much
As 2026 unfolds, the US yield curve is likely to become a central reference point across asset classes, signalling both the direction of front-end policy expectations and the market’s tolerance for long-end risk. While the front end could benefit from larger-than-expected rate cuts, long yields may remain stubbornly high as interest payments—expected to approach USD 1 trillion—remain the fastest-growing part of the federal budget. That combination would imply tighter financial conditions than headline rate cuts alone suggest.
For equity investors, the curve will help determine whether rallies broaden or remain selective. For safe-haven investors, it will help clarify whether higher yields reflect growth confidence or a credibility tax. Either way, in 2026 the yield curve is set to play a defining role in shaping the macro narrative across both risk-on assets and safe havens.
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