The yield curve for U.S. government bonds flattened after the Federal Reserve raised its benchmark fed-funds rate by a quarter percentage point to a range of 1.75% to 2%. The yield spread between the 2-year note yield and the 10-year note yield , a popular gauge of the yield curve’s slope, narrowed by one basis point to 40 basis points, or a 0.40 percentage point, the tightest since Aug. 2007. While, the spread between the 5-year note yield and the 30-year bond yield narrowed by 3 basis points to 25 basis points, or a 0.25 percentage point, also the tightest since Aug. 2007. Bond prices fall as yields climb. Because short-dated bonds are the most sensitive to interest-rate shits and longer-date paper is influenced by the economic outlook, the yield curve tends to flatten when the Fed lifts rates and investors hold a dimmer long-term outlook of the economy. Investors have closely watched the indicator as when inverted, short-dated yields exceeding their longer-dated peers, it suggests a recession can be expected in the future. Every recession since World War II has been preceded by an inversion of the yield curve.