Who’s Afraid of the Inverted Yield Curve?

Does an inverted yield curve mean a recession is coming? Should you be afraid of it? Not according to this, because no one really fully understands what the curve means.

Consider the inverted yield curve as the equivalent of an economic bogeyman. It's when the natural order up-ends and short-term interest rates are higher than long-term ones.

The Treasury bond yield curve inverted December 27 for the first time in five years. That gave shudders to those who see the phenomenon as a harbinger of recession. And yet, the U.S. economy is strong, and surveys show most forecasters think it will stay that way. So what does the inverted yield curve really mean?

This kind of discussion is way out of my league, but I find it interesting nonetheless.

  • Back in 2000, the last time the yield curve inverted, all the bulls were talking about how a recession was unlikely, it’s different this time, etc.

    This soundtrack is starting to feel very familiar.

    It is true that recessions don’t inevitably follow inverted yeld curves. But it seems to happen nearly every time. I wouldn’t bet against it.

  • I read that piece at WhartonKnowledge — I almost respondd to it, but there are so many mistruths and erroneous statement sin it, I gave up.

    Suffice it say the whole column is shite