This isn’t a healthy steepener; rather, it’s a front-end stalemate. Bills remain pinned above 4% while 2s glide lower, so the spread improves mechanically without signaling real easing of funding conditions.
The brief positive blip in January signaled markets briefly priced a faster cut-path than the bill complex would allow; but that died as administered-rate gravity and money market demand kept the 3-month floor stubborn.
Bank net interest margins don’t heal with 3-month money this expensive, credit creation stays price-capped and the curve’s “less inverted” narrative flatters to deceive.
The floor is still the floor!
h/t MonetaryCommentary