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Just as the inverted Treasury yield curve in recent years didn’t mean a recession was imminent, the current upwardly sloping yield curve doesn’t guarantee a strong economy.
The yield curve refers to the difference between interest rates at shorter and longer maturities. Shorter-term rates
BX:TMUBMUSD02Y typically are lower than longer-term ones BX:TMUBMUSD10Y. But at times this balance will be reversed, or inverted — and historically an inverted curve has been a reliable predicter that a recession was imminent.
This post was originally published on Market Watch
