Why everyone's so hung up on the recession red flag called 'the yield curve'

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Why everyone's so hung up on the recession red flag called 'the yield curve'
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When 'the yield curve' inverts in the bond market, recessions typically follow.

The spread between three-month and 10-year US Treasury yields has inverted for the first time since 2007.since 1955.

When the interest yield on the 10-year US Treasury bond becomes the same or lower as the two-year bond, recessions have often followed. That"inversion" was the first since 2007, Bloomberg said. The spread between the yields suggests that bond investors are more worried about getting a return in the short-term than they are for the long term. That means they're betting on a decline in US growth.between the two- and 10-year yield before the recessions of 1981, 1991, 2000, and 2008. An inversion on that part of the yield curve has preceded all nine US recessions since 1955.

Why? Because a flat or negative yield curve suggests investors believe keeping your money in short-term bonds is more uncertain than bonds that pay off a decade from now. Think about it. That position doesn't make sense. Why would you be more certain about 2028 than 2020? Thus, when the curve inverts, it signals something very risky is happening in the near-term asset markets.The curve reacts to a lot of things. For instance, it reacts to how investors feel about risk in other assets.

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