Steepening yield curves may be just around the corner. No matter which version of the yield curve you study — Treasury "twos to tens," (two–year T–note to 10–year T–note), Fed Funds to Treasury tens, swap twos to tens, or Fed Funds to swap tens — U.S. yield curves have been flattening steadily since at least early May 2004.

Now, however, interest–rate analysts believe the Fed will soon call a halt to the current tightening sequence. (The minutes of the most recent FOMC meeting, released on April 18, supported that belief.) A variety of forecasting tools are indicating the possibility of sharply higher long–term yields in the near future.

All things considered, this might be a good time to brush up on yield–curve spread trades — with the idea it will soon be time to "buy the curve" in anticipation of a steepening yield curve.