Steep U.S. Yield Curve Suggests Strong Economic Growth Ahead; 10-year vs. 1-year gap highest in several years, seen staying that way.(A)

Byline: CHRISTINA WISE

The Federal Reserve's efforts to keep the recession at bay and interest rates at their lowest level in 45 years have helped push the Treasury yield curve to its steepest level in more than a decade.

That has sent a surge of money coursing through the veins of the country's monetary system.

"When you see a steep yield curve, particularly one as steep as it is right now, it's suggesting that investors are expecting better economic times ahead," said John Norris, senior portfolio manager and economist with Morgan Asset Management.

The yield spread is the difference between the yields on long-term and short-term Treasury notes.

Say the yield on a 10-year Treasury note is 4% and the yield on a one-year note stands at 1%. The difference -- 3% -- is what gets plotted in the yield curve. The higher the figure, the steeper the yield curve is said to be.

"The idea is that when long-term rates are higher than short-term rates, it's a reflection of where short-term rates will be in the future," said Tony Crescenzi, chief bond market strategist with Miller, Tabak & Co.