Answer: Bullish flattening

## Explanation **Correct Answer: A** **Flight to quality** refers to investors moving from risky assets to safe-haven assets, typically government bonds. This causes: 1. **Long-term rates fall more than short-term rates**: Investors bid up prices of long-term government bonds, driving down long-term yields 2. **Yield curve flattens**: The spread between long-term and short-term rates narrows 3. **Overall rates decrease**: This is a bullish environment for bonds **Why other options are incorrect:** - **Option B (Bearish flattening)**: Involves rising rates overall, which contradicts the flight to quality scenario - **Option C (Bullish steepening)**: Would require short-term rates falling more than long-term rates, which is less typical in flight to quality situations

Author: LeetQuiz Editorial Team