What exactly does steepening and flattening imply?
Does:
Long end Yields rise and Short end yields drop?
Long end stays the same, Short end drops?
Long end rises and the short end stays the same?
Same questions with flattening.
Is there any definite explanation about steepening and flattening or can it just mean any of the three scenarios above?
there isn’t, it all depends on the question and if numbers and data are provided or not
I think it depends on the changes in relative magnitude. It helps to identify the shaping by drawing.
Steeper means that:
Longnew − shortnew > Longold – shortold
Flatter means that:
Longnew − shortnew < Longold – shortold
Guess the relative change is what I should be looking out for. Cheers guys!