“If the FED is deemed to be too aggressive with its current rate hikes and a POTENTIAL shrinking of the balance sheet, the 2/10 will flatten and certainly test its previous low of around 75 basis points (it’s currently at 113 basis points). BUT THIS BECOMES A DIFFICULT TRADE BECAUSE WE ARE IN UNCHARTED FUNDAMENTAL TERRITORY. WE DON’T KNOW THE IMPACT OF THE FED’S MASSIVE BALANCE SHEET OF $4.5 TRILLION IN ASSETS. The Fed’s QE programs has distorted bond prices so it will take patience to understand how the Fed’s policy has affected the long end of the Treasury market. Regardless, the yield curves will be an important indicator for investors as we move forward into the second quarter.”