US Treasuries - Yield curve tightest since July 7

The Treasury yield curve or the spread between the shorter-dated and long-dated Treasuries flattened/ narrowed on Friday as traders priced-out extreme dovishness at the short-end of the curve.

The difference between the 30-year yield and the 5-year yield narrowed to 96 basis points, the tightest since July 7, from 103 basis points a week earlier.

Meanwhile, the 2-year yield rose to 1.388% on Friday, which was its highest since July 26.

The flattening of the yield curve was largely due to a sharp rise in the short duration yields and not due to a big drop in the long duration yields, which indicates traders are slowly pricing-in a possibility of another Fed rate hike in December.

Currently, the 10-year yield trades at 2.202% and the 30-yr and the 5-yr hover at 2.769% and 1.806%, respectively.