Reversing Course, Treasury Will Stop Seeking Long Maturities To Cushion Market

That's important for the health of the economy. Yields on longer-term Treasury debt serve as benchmarks for everyone from home buyers to corporate treasurers. A "steepening is where we could get into problems with the housing market," Tannuzzo said.

It's probably also welcome at the Fed, which has begun to slowly reduce its balance sheet by not rolling over some of the maturing Treasury and mortgage-backed securities in its portfolio. Fed policy makers have gone out of their way to make the unwind as painless as possible for the bond market -- and the Treasury's new approach will help in that regard.