Hi, I was looking at the yield curve over the last year and was noticing it move from a flat curve in Sept and Oct 07 to a slight inversion at around the 2 year maturity mark. Would that support the indication of expected recession? After that the yield curve steepens quite a bit. In normal instances it seems that would support expected expansion and the wish to not be locked in at lower yields for longer periods. But this steepening seems to suffer more from a plunge of short term yields and a flight to safety in the current environment rather than a rosey outlook of the future. I guess it can still support expected expansion if the market believes the bottom is near. Am I interpreting this right? Appreciate any insight. Thanks, Shab
The yield curve was inverted in early 2006 also. I remember at the time hearing that since the 1940’s, the yield curve was inverted 6 times and out of those, 5 ended in recession.