Early Expansion - Short term rates

[ajb1]

Can someone explain why we would see rising short term rates and flat or rising bond yields during an early expansion?
Why wouldn’t we expect to see low short term rates?

 

[ayousaf]

Declining inflation.

 

[cokemicho]

ajb1 wrote:
Can someone explain why we would see rising short term rates and flat or rising bond yields during an early expansion?
Why wouldn’t we expect to see low short term rates?

As Ayousaf said, it has to do with monetary policy and inflation.
Imagine that in a recession in order to boost the economy, the central banks lower interest rates in order to promote credit (via Retail banking) and as a consecuence promote consumption so the economy gets healthier (always taking care of inflation).
After the economy gets better ( early expansion) you have to rise rates, so the banks lower credit offering and you can control inflation rising (remember if you keep low rates and because of the credit facility consumption goes up and up, there is a high probability of the inflation to goes up).
Thats why my friend, I tried to get myself clear, hope i did.