[Verse 1]
Picture a yield curve like a mountain slope today
Short rates at the bottom, long rates climb away
But curves don't always move in parallel lines
Sometimes they twist and bend through economic times
[Chorus]
Steepen means the spread grows wide
Short stays low while long rates ride
Flatten means they squeeze together
Bull steepen, bear steepen, know the weather
Bullet strategy for the middle ground
Barbell weight at both ends found
Ladder rungs spread through the years
Non-parallel shifts, now crystal clear
[Verse 2]
When central banks cut short-term rates down low
But inflation fears make long bonds harder to hold
The curve steepens like a ski jump's angle sharp
Short-term money cheap, long-term costs depart
[Chorus]
Steepen means the spread grows wide
Short stays low while long rates ride
Flatten means they squeeze together
Bull steepen, bear steepen, know the weather
Bullet strategy for the middle ground
Barbell weight at both ends found
Ladder rungs spread through the years
Non-parallel shifts, now crystal clear
[Verse 3]
Flattening happens when the ends converge
Short rates climb up or long rates take a purge
Recession whispers make investors flee to safety
Long bonds get bid while short rates climb up hastily
[Bridge]
Duration risk hits different parts
When curves reshape instead of shift apart
Convexity becomes your trading friend
As yield curve twists around each bend
[Chorus]
Steepen means the spread grows wide
Short stays low while long rates ride
Flatten means they squeeze together
Bull steepen, bear steepen, know the weather
Bullet strategy for the middle ground
Barbell weight at both ends found
Ladder rungs spread through the years
Non-parallel shifts, now crystal clear
[Outro]
Watch the curve, don't just watch rates
How slopes change determines trading fates
Steepen, flatten, twist and turn
Non-parallel moves, now you learn