From Chairman Bernanke's last Humphrey-Hawkins testimony to today the Treasury yield curve has steepened and quite a bit -- yields have risen on 3 year maturities out to 30 (see chart). The long Treasury is up 100 basis points in yield and the 10-year nearly that. All in all, the steeper curve is a good outcome. Pricing in higher yields for notes longer than 2 years in maturity suggests a market anticipating growth and the Fed reacting to it.
Inflation worriers need not worry just yet -- the first thing the Fed and Treasury needed to do was restore confidence that there will be an economy. Credit spreads and the curve suggest that policy has gone a long way in that direction, but market participants are still not fully sold on the growth scenario lifting all lenders and borrowers. It will be interesting to hear how Bernanke tells the unwind tale to keep inflation expectations moored once economic growth begins to recover.