Another mustard seed

May 22, 2009

The Cleveland Fed likes what it sees in the steepening yield curve, but no guarantees:

More generally, a flat curve indicates weak growth, and conversely, a steep curve indicates strong growth. One measure of slope, the spread between ten-year Treasury bonds and three-month Treasury bills, bears out this relation, particularly when real GDP growth is lagged a year to line up growth with the spread that predicts it.

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