According to the US Treasury, on November 15, 2021, the one year treasury rate was 0.18%, and the ten year treasury rate was 1.63%.  On November 30, the one and ten year stand at 0.24% and 1.43%. This represents a closing of the one-ten year gap by 26 basis points in 15 days.

Who ran over the yield curve?  As of November 15, Jay Powell was still clinging to the policy framework he announced in March 2020 in the midst of the deflationary crash triggered by the coronavirus shutdown.  The most explosively inflationary monetary policy in Fed history, holding short term interest rates at zero – and well below zero in real terms – while creating some five trillion dollars in the space of fifteen months.  Circumstances changed, but policy did not.

But on November 22, in his renomination acceptance speech, he characterized inflation as Public Enemy Number One, and on November 30, put an acceleration of QE tapering on the table, raising the potential for interest rate target increases as early as the first half of 2022.  Regarding his favorite inflation adjective, “transitory”, he said “it is probably time to retire that word”.  His new found sense of monetary responsibility flattened the curve.