Flat yields throw curve at mutual fund investors

Along with bond traders, pension managers and other assorted big-timers, mutual fund investors by the millions begin 2006 facing the riddle of a flattened yield curve. In the last week of December 2005, the interest yield on two-year notes of the US Treasury surpassed the going rate on 10-year Treasuries. To take an example, at one stage on 29 December, a buyer could get 4.39% on the two-year, a basis point better than the 4.38% payoff offered by the 10-year. A flat or inverted yield curve is considered an anomaly because it distorts a common principle of investing in bonds, notes and ...