A bull steepener is a yield-curve move where short-dated yields fall faster than long-dated yields, steepening the curve as the front end "bulls" on rate-cut expectations. It is the classic signature of an easing cycle beginning, when markets price the central bank toward the exit.
Of the four canonical curve regimes, the bull steepener pairs a falling curve (bull) with a widening 2s10s spread (steepener). It is driven by the front end: short rates collapse as markets discount imminent cuts, while long-end yields fall less, anchored by term premium and long-run inflation expectations. Contrast the bear steepener, where the long end sells off and rates rise.
With the Fed entering its 2024–2025 easing path, a sharp bull steepener — front-end yields collapsing on cut pricing — is the historical signature of the cycle turning. Desks read its onset as confirmation the policy pivot has been validated by data, often preceding or coinciding with the un-inversion of 2s10s.
In the second half of 2024 the 2s10s spread un-inverted and steepened sharply as two-year Treasury yields fell faster than ten-year yields, with the front end repricing toward the Fed's September 2024 50bp cut. The two-year, more sensitive to the policy path, dropped well over a percentage point from its 2023 peak near 5%, while the ten-year fell less — the textbook bull-steepening pattern of an easing cycle.
Bull steepener: Δ(short yield) < Δ(long yield) < 0 → 2s10s widens, overall curve lower