On March 19, 2021, 10-year Treasury yield rose to 1.76% while 2-year Treasury yield stayed at a low level of 0.16%, causing the term spread to increase to a new all-time high level of 1.58% (= 1.76% - 0.16%) since the outbreak of the pandemic. Which of the following is NOT one of the possible reasons that explain why the upward-sloping yield curve took shape at the time?

Group of answer choices

Long-term bonds and loans are subject to higher level of interest-rate risk than short-term bonds and loans.

The market expected the economy to grow and inflation to rise in the future.

The Federal Reserves has implemented a tightening monetary policy to fight inflation by raising short-term interest rates such as federal funds rate.

The market expected interest rates to increase in the future.