Thursday, May 28, 2009

Yield Curve: Good News or Not?

When you look at the chart, it's clear that a high yield curve (the difference in yield between the 10-year bond and the 2-year bond) generally precedes a period of growth.
That's good, no?
Maybe not this time--as the higher 10-year rates COULD be a result of major players avoiding 10-year bonds to stay short, in T-Bills or the 2-year.
See, e.g., yesterday's post here.


J. Strupp said...

Expectations of future inflation are beginning to set in. I would say that that is a good thing.

Anonymous said...

The shorting is on again today. If you can find it, buy more ammo.