Not All Yield Curves Are Steepening

The Treasury yield curve has been steepening recently, reflecting bond managers' view that the economy is about to get a lot stronger. However, corporate bond yield curves have been flattening, and that could significantly affect the economy as well as relative investment values.

You can view bond yield curves in many ways. Probably most useful for a bond manager is the curve between two and 10 years, because that's where the bulk of tradeable bonds lies.

Corporate bond yields are normally expressed in terms of how much more they yield than comparable Treasuries. This spread is measured in basis points, or 1/100ths of a percent. For example, the 10-year Treasury is now yielding 5.12%, and a similar maturity investment grade corporate is yielding 6.92%, so the corporate would be trading at a spread of 180 basis points. ...