The term structure of interest rates (the yield curve) has historically been a leading indicator of economic indicator. Over the last few months, the yield curve has become much steeper. The December lows on the 30 year was 2.52% with the 3 month at basically 0. Since then the 3 month has moved up, but not by much while the 30 year has soared to over 4%. A steeper yield curve is a good sign for economy. It indicates that there will be higher interest rates due to more demand for capital. The yield curve has typically been a good indicator, but one has to wonder if the same rules apply in this situation.
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