More good news four our beleaguered economy, this time from the world of Treasury bonds: the spread between the 2-year and 10-year notes widened this week to 2.38 percent, or 238 basis points, marking its broadest since mid-November.
Why is that important? The difference between those two figures is the reward that investors get for putting their cash away for a longer period of time. When the spread between the two yields gets wider, it is a signal that people's long-term expectations for the economy are positive.
It's similar to the difference between money market accounts and the stock market. When people are nervous about the economy, they'll abandon the long-term returns of equities for the short-term safe havens of money markets. The same principle applies here. The fact that people have become more willing to make long-term investments is a very good sign indeed.
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