(8 marks) Flattening Treasury Yield Curve The Federal Reserves long-awaited liftoff (raising interest rate by 25 basis points) this week cemented at least one consensus: the yield curve is going to flatten much further. What that means in the context of the Treasury curves reputation as a U.S. recession indicator is up for debate. Some lesser-watched tenors have already inverted, while the curves that people care about are trending in that direction. The 2-, 10-year yield gap broke below 19 basis points this week, while the 5-, 30-year spread reached as low as 24 basis points. (Bloomberg, March 18, 2022)

You are invited to give a talk to a group of communication students on yield curves. Using the news article above, write a short lecture (between 250 to 350 words) to explain to the students in simple terms the relationship between the rate hike, flattening of the Treasury yield curve, and the possibility of a recession.