I nterest R ates The yield curve on U.S. Treasuries has flattened noticeably since last month, with long rates falling but short rates remaining steady. Of course, expectations about future rates may change even if today's rate doesn't. The recent flattening could also reflect reduced inflation fears, greater confidence that the Federal Reserve will keep rates low, or decreased uncertainty over the future course of the economy. Another closely watched indicator is the TED spread , the difference between interest rates on Treasury securities and eurodollar instruments of the same maturity.
Eurodollar rates are generally higher, since they embed the default risk of the issuing bank.
The TED spread thus acts as an indicator of investors' relative confidence, which in turn links it to gold prices and exchange rates, two measures that also reflect concerns about confidence.