Last week, the yield curve inverted for the first time since 2007. The yield for 10-year Treasuries fell below the yield for the 3-month T-Bill.
The inversion set off alarm bells and US stocks fell sharply. While concerns are reasoned, the alarm bells may be premature.
Inversion is an historically reliable but early recession indicator. The yield curve isn’t saying recession is imminent, although it’s likely.
An Inverted Yield Curve Is Just a Fever
Many analysts seem to think that an inverted yield curve causes recession. That is simply not true.
Think of an