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3 ETF Trends That Might Shock the 'Risk-On' Mindset



3. Yield Curve Flatter, Not Steeper in 2014? In 2013, perceived economic well-being coupled with the Fed signaling an intent to slow its asset purchases sent 10-year and 30-year U.S. bonds down much faster than shorter-term bonds (e.g., one-year, five-year, etc.). This could be seen in a steeper yield curve. Some also profited from the trend via iPath Treasury Steepener (STPP).



In 2014, however, a different picture may be developing. Money has been slowly creeping back into assets on both the long end of the yield curve as well rates-sensitive real estate investment trusts.

In contrast, demand for the shortest end of the Treasury curve (e.g., one to three years) has been neutral at best. The consequence? The yield curve is stabilizing and may ultimately flatten as the year progresses; in other words, yields on shorter-term bonds may rise while yields on longer-term bonds run in place. Year-to-date, iPath Treasury Flattener ETN (FLAT) may be signaling a changing of the guard.

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This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Certified Financial Planner Gary A. Gordon, MS, is the president of Pacific Park Financial, an SEC-registered investment adviser in California. He has more than 23 years of experience as a personal coach in ¿money matters,¿ including risk assessment, small-business development and portfolio management, and has taught finance in Mexico, Singapore, Hong Kong, Taiwan and the U.S. He wrote the draft copy for ¿Maverick Investing,¿ a McGraw-Hill publication, and writes commentary for Seeking Alpha in addition to ETF Expert, for which he also hosts the ETF Expert Radio Podcast.
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