If an upward-sloping yield curve starts to flatten, portfolio managers should try to shorten the maturity of their liabilities.

Question

Quizplus · Accepted Answer

A flattening yield curve suggests that short-term interest rates are rising closer to long-term rates, which typically indicates a slowing economy. Portfolio managers might actually consider lengthening the maturity of their assets to lock in higher long-term rates before they potentially decrease, rather than focusing on the maturity of their liabilities.

If an Upward-Sloping Yield Curve Starts to Flatten, Portfolio Managers