Econintersect: Stocks had a muted response to the report an unexpectedly low number of jobs gained in December, but that was not the case for bonds. The yield for the 10-year Treasury dropped 9 basis points. That produced a one-day price gain for the bond of 0.84%. Over two days the gain has been 0.97% and from the start of the year the gain has been 1.19%. These are big moves for a 10-year Treasury.
Most of the yield bump that followed the Fed taper announcement on 18 December 2013 has been erased by the close of market on 10 January 2014.
After several months of steepening, the yield curve has been flattening since the beginning of December. The flattening became more pronounced after the 18 December taper announcement but the last two days have seen a decided weakening of the flattening. Steepening is experienced when higher economic growth and/or inflation is anticipated. Flattening is seen when there is an expectation for weakening growth and/or falling inflation.
Daily Treasury Yield Curve Rates (U.S. Department of the Treasury)
US 10-YR T-Note Futures - Mar 14 (Investing.com, 10 January 2014)