DC Lite #299

"A flatter yield curve should benefit larger over smaller firms"

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Daily Chartbook
February 11, 2025

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Welcome back to DC Lite: Daily Chartbook’s free, entry-level newsletter containing 5 of the day’s best charts & insights.

1. NFIB. Small businesses are reporting the best credit conditions since June 2022.

2. Yield curve. "Ever since the soft CPI on January 15, the yield curve has started to flatten. Specifically, it’s a bull flattening, which typically signals lower inflation expectations and potential easing of monetary policy. Here we show a 20-day smoothed version of the US yield curve."

3. Stocks vs. yield curve. "A flatter yield curve should benefit larger over smaller firms. The chart below shows a close correspondence between the S&P’s large versus small-cap index and the reverse of the yield curve."

4. Leveraged ETFs. There are is a record ~$95bn in leveraged long ETFs vs. just ~$9bn in their bearish counterparts.

5. Old vs. new valuation ranges. "Increasingly, at least from my perspective, the U.S. stock market’s 'new valuation range' (after 30 years, it’s probably misleading to continue calling it 'new') appears to be permanent."

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