What is a yield curve inversion and why does it matter?
Most economists have an opinion about reliability of an inverted yield curve in determining the future of a country’s economic growth. But for those who didn’t study economics, it can be quite a confusing measure. This short overview should help you understand what it means and why it matters.
There are three little words which never fail to send financial commentators into a spin: inverted yield curve. That is understandable. Every US recession since the Second World War has been preceded by an inverted yield curve, when the yield on short-term treasuries moves ahead of the yield on long-term treasuries, indicating that investors have little confidence in the economy. This has led the curve being described as “a barometer of global financial health” and…
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