Long End of the Yield Curve Keeps Getting Steeper

The biggest question regarding a second round of quantitative easing by the Fed is increasingly concerning when rather than if.  As a result, the shape and steepness of the yield curve is becoming artificially distorted.  The chart below shows the historical ratio between the yield on the 30-year and 10-year US Treasuries.  While the curve has been steepening for some time now, ever since Fed Chairman Ben Bernanke broached the subject in Jackson Hole this August, the ratio has literally broken out to unchartered territory.  Steep yield curves are typically considered conducive to economic growth, but will an artificially steepened curve produce the same effect? 

Want actionable advice from Bespoke?  Subscribe to Bespoke Premium today.