Long Term Perspective
The yield between the 2-year note and the 10-year note reflects changes in the economic environment. When the spread narrows, it reflects potential softening in economic activity -- possibly even recession. Until late October, market players focused on the 30-year bond, but not that the Treasury announced it will no longer issue new long bonds, attention has shifted to the 10-year Treasury note as a benchmark security.

Short Term Perspective
Bond market investors appear to have decided that an economic recovery is on the horizon. Consequently, they believe that the Fed easing cycle will come to an end soon (in early 2002) and are already factoring in increased demand for borrowing. Both the 2-year and 10-year note yields increased dramatically from the beginning to the end of November. On average, the increase looks minor, but the monthly variation is wide.

Alternative Inflation Measures   •   Gold Prices   •   Employment Cost Index   •   Civilian Unemployment Rate

Pool of Available Labor   •   Nonfarm Productivity   •   Treasury Yields   •   Stock Prices   •   Fed Monetary Policy Summary