Yield Curve ETNs

The 'yield curve' expresses the difference in yields between short and long dated Treasuries. Stockcharts.com has some excellent graphical representations of the yield curve.

Common wisdom says that steep yield curves are bullish for economic activity. Thinking is that increases in economic activity raise demand for longer dated borrowing (plus the spectre for inflation). At the very least, big spreads between T-bills and the 10 yr present a fertile carry trade environment.

When economic activity is forecast to decline, then the spread between short and long rates narrows as as folks swap risk for short term liquidity, thus flattening the yield curve.

Currently (as suggested by the stockchart graphs) the yield curve is pretty steep, and has been steepening since early 2009.

I suppose it was inevitable, but there are now ETNs to play either steepening or flattening of the yield curve. Caveat emptor for sure...but probably products that some folks are considering for their 'alternative assets' category.

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