As we ponder the future shape of the US yield curve — a curve that allows banks to mint free money by borrowing short and lending to the government — we present you with this fascinating chart out of Greece courtesy of Morgan Stanley.
As you can see, Greek banks devoured bonds as the Greek 10Y/3M yield curve steepened.
Of course, if Greece goes bust, all of these long-dated bond purchases will prove to have been poisonous.
Just something for our banks to consider.
Photo: Morgan Stanley