Trouble in the Egypt, Tunisia and Jordan is creating fears of inflation instead of the usual flight to quality. Investors who use the shape of the yield curve probably expected this development. The curve is still very steep.

The long end of the curve is particularly indicative of inflationary expectations, and the 10 yr./30 yr. spread is wider than usual. Even the spread between the 20 yr. and 30 yr. is steep. These two issues often have a negative slope because life insurance companies need this long-term investment to offset their long liabilities.

Daily yield curves are on this free website: www.treas.gov