Bond Investors Are Stock Investors' Latest Concern

Do flat times in the bond market always mean the same for stocks? That's the latest question testing the bull market, which has propelled stocks up for more than eight years and 16 percent so far in 2017.

The Treasury yield curve, which measures the difference between shorter- and longer-term U.S. government debt, like two-year and 10-year Treasuries, has been flattening for a while. But the fact that the narrowing has accelerated recently, and that there is not much room left between the two rates, could be a growing concern for stock investors. A month ago, 10-year Treasuries were yielding 0.86 percentage points more than two-year notes. That's already not much of a return for lending money for an additional eight years. But by the close of day on Wednesday, the difference between the two rates narrowed to just 0.67 percentage points. That last time the gap was that small was November 2007, just before the Great Recession.