Bloomberg writes "Yields Flatten QE2 Critics With Curve Showing Fed End". The article says, "Government bonds are falling the most in a year as the gap between yields on longer-term Treasuries show that the Federal Reserve's second round of quantitative easing may be its last. The difference between 10- and 30-year yields shrank to 1.05 percentage points, or 105 basis points, on Dec. 15 from a record 1.60 points on Nov. 10, the fastest contraction since the 1980s, according to data compiled by Bloomberg. The shift in the so-called yield curve is taking place as Bank of America Merrill Lynch index data show U.S. bonds due in 10 years or more lost 4.64 percent this month, trimming 2010’s gain to 8.37 percent." The piece adds, "Flattening usually foreshadows the end of Fed interest-rate cuts aimed at stimulating growth. U.S. reports this month showed rising retail sales, higher consumer confidence and a jump in industrial production after the central bank expanded its balance sheet to an unprecedented $2.39 trillion, pumping money into the financial system."
