“Yet in early April the curve began to flatten. The yields on two-, three- and five-year Treasury bonds perked up as money markets began to price in the prospect that the Federal Reserve would raise interest rates in 2023. There were bigger moves at the long end of the curve. By this week the ten-year yield had fallen to 1.5%, more than 0.2 percentage points lower than at the end of March. The 30-year yield fell by even more.

Whatever lies behind this, it cannot really be laid at the Fed’s door. The decline in long-term yields started long before last week’s Fed meeting, which sounded a more hawkish tone on inflation. Some put it down to “technical factors”—bond trades made for reasons of risk management, to rebalance portfolios or follow price momentum. Global influences surely played a role. Ultra-low interest rates in Japan and Europe act as a check on yields in America. They can only go up so far before the weight of buying by yield-starved foreigners pushes them down” [From The Economist]

Whatever lies behind this, it cannot really be laid at the Fed’s door.”

  1. Please help me analyze the sentence structure.
  2. Does “this” refer to the fall of yield?
  3. Does it mean that the fall of yield can be attributed to whatever reasons but not the Fed’s responsibility?
  4. What do “check”, “weight” and “yield-starved” mean?
  1. I’ll try.
  2. “This” refers to the flattening of the yield curve - short term rates up, long term rates down, since both are discussed in the previous paragraph, but then the rest of the text only discusses long term rates. It may be that text before this was focusing only on long term rates.
  3. The reason is not clear, but flattening is not due to Fed actions.
  4. Check = restraint
    Weight = large effect
    Yield starved = desperate to find good yields in an ultra-low rate environment