News

Key takeaways

• The US yield curve has started 2026 at its steepest levels since November 2021, with 2–30 reaching 139 basis points, while the more closely watched 2-10 stands near 70 basis points.
• This steepening reflects not just expectations of front-end easing, but rising long-end risk premia linked to fiscal, inflation and supply concerns, helping explain why tangible assets have risen despite higher long-end yields. 
• The yield curve remains a cross-asset signal, shaping outcomes for equities, credit and safe-haven commodities alike in 2026.

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.

Why safe-haven investors should care just as much

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. 

A potential focal point for 2026

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.

Listen to the full episode now or follow the Saxo Market Call on your favorite podcast app.

Today’s Links

Tesla shareholder to get priority access to SpaceX IPO? Bill Ackman wants to help SpaceX go public with a “special purpose acquisition rights” vehicle that would provide Tesla shareholders with prioritized access to the SpaceX shares. Whatever the setup, which given Musk’s desire to avoid the traditional IPO route could be very unusual, if the market gets the sense that Tesla shares can offer early access for the SpaceX IPO, who knows how high Tesla shares might go. (As always, not a recommendation for a course of action!)

More smart money going to cash. I forgot to mention this one on the podcast, but this is another sign of smart money - Apollo Management - getting cautious at these very high levels of risk sentiment and raising cash allocations significantly.

Affordability pressure rules out having children for many. A follow-on article to Mike Green’s viral post on the cost of living with some useful additional illustrations of why Americans are having fewer children than they want to have, if also with a couple of very confusing graphics.

Is half of the global financial system in the shadows and if so, what are the risks? This is an eye-opener on the scale of shadow banking, which is getting its tentacles into ever more business areas, including insurance.

Are we all participating in a huge pyramid scheme? The ugly pension math suggests that somewhere down the road, there will be material selling of equities to fund pension payments as dividends and profit distributions are not sufficient, meaning that we are all involved in a pension pyramid scheme with potentially devastating risks. (PDF download link available on that page)

Even Waymo has a way to go, especially when you turn all the lights out. Waymo is the best-in-class (really only in class in the US, at least) in autonomously driven vehicles, but when the power goes out and stoplights go dark, the rules of the road change, which humans can navigate improvisationally, but autonomous vehicles can’t, at least not yet.

This is ridiculous. We know why - nonetheless, the audacity, as SpaceX is buying a lot of Tesla Cybertrucks.

Chart of the Day - Tesla (TSLA)

I am far from being a Tesla booster, but I am certainly open to the idea that the stock can continue higher if a speculative rush develops on Musk constructing some way of floating SpaceX that prioritizes access for Tesla shareholders. But one gets the feeling that next year is the year that the Autonomous FSD/Cybercab really needs to become operational and see significant deployment. And SpaceX itself has a lot to deliver as well with its Starship platform after its many blowups and unproven status - yet to deliver payloads beyond a tiny fraction of its rated capacity. The year 2026 could prove a critical one where Musk’s companies need to start deliver more in the numerator of the valuation based on a reality/”future fantasy” ratio. In the meantime, remember that Tesla constantly dilutes shareholders with Musk’s ownership in the company rising after the Delaware Supreme Court ruled that his original huge pay package of more than USD 50 billion must stand.

Questions and comments, please!