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Sunday, February 20, 2011

How to Play the Yiekd Curve With ETNs

In addition to the ETNs that focus on particular parts of the yield curve which I reviewed in my previous article, iPath has introduced instruments that allow investors to take positions on the shape of the yield curve. Specifically, these instruments allow one to take a view on the spread between 2 year and 10 year Treasuries. Institutional investors and traders have long taken positions on this relationship through futures and swaps but these instruments offer the simplest and most direct means for smaller investors to do so. The two iPath ETNs are ticker symbol STPP which increases value when the yield curve steepens (the differential between 10yr and 2 year rates increases) while the ETN with the ticker FLAT increases in value when the curve flattens

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