A topic we discussed since the beginning of class, is the U.S. yield curve and its inversion. An inverted yield curve means we expect interest rates to fall in the future, and the yield on short-term(3 month) bonds gain more yield than long term(10-year) bonds. This causes businesses to park their assets in longer term investments, and reduces short term liquidity, As we know, Investment is more volatile than GDP, meaning its changes more rapidly.
An inverted yield curve can also be a sign of a looming recession, so its presence worried many economists and consumers for the future. However, now that the yield curve is no longer inverted, this can be good news for our economy and can indicate that we will continue our great economic expansion following the 2008 recession.
https://www.forbes.com/sites/bradmcmillan/2019/11/13/the-yield-curve-has-un-inverted-now-what/#2d363a8b3866
I'm glad the yield curve was reverted, although I wasn't too concerned in the first place since it was inverted for such a short time, had it been inverted fro 6-7 months then there would be more of a concern
ReplyDeleteI think that this will lead to a series of short term investments for investors aiming to gain higher returns.
ReplyDeleteAlthough it was only inverted for a short time it can still be a signal that recession is near. Especially with the trade war still ongoing.
ReplyDeleteThis is great news! I wonder if it was just a blip we can disregard as an oddity or if measures were actively put in place to revert the yield curve to its default position. Another important aspect to note is that the article talks about how the un-inversion of a yield curve is also a sign of a recession, through past experiences, a recession follows the reversion within a year, so we may not be in the clear yet!
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