A ‘funny’ thing happened a month ago. The Treasury yield curve suddenly started to collapse… despite gains in stocks and positive economi data surprises… the question is, why?
Here’s one possible reason why..
Originally submitted by GovTrader,
TL/DR: Tax reform creates pension fund incentive to buy 30yr bonds NOW.
Currently, the top corp tax rate in the US is 35%. It looks most likely that rate will drop to 20% when tax reform passes. If you are a corp with an underfunded pension fund, you get a tax incentive to fund the pension THIS YEAR vs in the future when the corp tax rate drops to 20%.
This post was published at Zero Hedge on Nov 21, 2017.