With Treasury yields spiking to a two-year high, fixed-income investors are taking a hit, but traders can use exchange traded funds to capitalize on a steepening yield curve.

Treasury yields are adjusting to expectations that the Fed will begin to scale back its asset purchasing program faster-than-expected. [Treasury ETF Lowest Since April 2012 as Yields Spike]

Yields on the benchmark 10-year Treasuries briefly topped 2.5% Friday.

“Bernanke made it clear that tapering QE was on the table,” Ian Lyngen, a government-bond strategist at CRT Capital Group LLC, said in a Bloomberg article. “The fact that a QE story has taken out a lot of the bid for stocks has on the margin kept the Treasury sell-off from exacerbating, but in the wake of the Bernanke press conference, the bearish sentiment in the Treasury market appears likely to be with us for a while.”

While some have started to shift over to short-duration fixed-income assets in response to a rising rate environment, investors can also consider the iPath US Treasury Steepener ETN (NYSEArca: STPP) to directly capitalize on rising interest rates.

The STPP exchange traded note has gained 10.5% over the past month. In comparison, the iShares Barclays 7-10 Year Treasury Bond Fund (NYSEArca: IEF) has declined 3.3%.

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