Don’t Ignore the Steep Yield Curve

by Laura Ehrenberg-Chesler on September 5, 2013

in Bonds,Economic Indicators,equity market,interest rates

Just in case we hadn’t mentioned it lately, the yield curve is really steep.  With the 5-year Treasury Note at 1.69%, the 10-year Treasury at 2.86%, and the 30-year Treasury at 3.78% an investor is getting paid to extend maturities.

However, this is not only significant for bond investors.  A steep yield curve is indicative of an improving/strong economy.  On Tuesday of this week we received more economic data that supports this thesis.  Manufacturing PMI and construction spending were both strong, with the PMI growing at its fastest pace in over two years.

Don’t ignore the steep yield curve.  It is sending the market a simple, positive message.

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