Yield Curve Steepens to Record on Inflation Worry

Sunday, 16 Jan 2011 03:26 PM

The difference between 2- and 30- year Treasury yields widened to a record as investors demanded higher compensation when buying longer-term securities on concern a strengthening U.S. economy will spur inflation.

The so-called yield curve steepened to 3.96 percentage points Friday, compared with an average of 2.07 percentage points the past 10 years. Treasuries fell Friday as reports showed retail sales and industrial production both rose in December. The Federal Reserve will buy up to $21.5 billion in Treasuries this coming week, including inflation-indexed securities.

“Rates are headed generally higher from here as we see a slow recovery, trending higher,â€