Widening T-Note Spreads: A Bullish Omen for The Economy

The difference between the yield on the 2-year Treasury note and the 10-year Treasury note was +2.91% on Friday o2/04/11, the largest spread ever recorded. 

Conventional economic theory argues that when the spread widens (i.e., the yield curve steepens), investors are optimistic about the strength of the U.S. economy and demand higher yields on longer notes to hedge their investments against inflation.

(Source: Treasury Department)