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Yield Curve Steepest Ever

You might have seen the headlines on Monday that read ‘Yield Curve Steepest Ever.” But what does it mean for investors?

Literally, it means the U.S. Treasury yield curve, or the spread between yields on two-year notes and 10-year notes widened on Monday to its steepest level on record.

Specifically, the spread between the yields pushed out to 280 basis points on Monday from 274 basis points late last week.

Why does that matter?

It shows that investors are betting an accelerating recovery will fuel inflation and hurt demand for government debt.

Can you trade it?

My trade is short the TLT, explains Karen Finerman. It’s working and I think it’s more to go.

But perhaps more important, the steeper yield curve should benefit banks , she says, allowing them to borrow at lower short-term interest rates and lend at higher longer-term rates. It could be fantastic for banks.


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Trader disclosure: On December 21st, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Seymour Owns (AAPL), (AA), (BAC), (ETFC), (INTC); Finerman Owns (AAPL), (GOOG); Finerman's Firm Owns (MSFT), (NDAQ), (SKS), (TGT), (WMT), (BDX), (BCR); Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (TLT); Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Call Spread; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm And Finerman Own (CVS); Finerman's Firm And Finerman Own (WFC) Preferred

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