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Bespoke Investment Research notes the unusually steep yield curve. In fact, it's close to the steepest curve on record. The only other time the curve was wider was in August 1982 when the stock market took off.

A few years ago, I looked at the impact of the yield curve on stock prices. The effect is pretty dramatic. Over a 45-year period, all of the S&P 500's capital gain took place when the the 10-year note was higher than the 3-month T-bill by 65 or more basis points. That's about 70% of the time. For the other 30% of the time, the market was flat. Today, the spread is about 380 points.

Posted by edelfenbein at December 30, 2009 10:52 AM