Inversion Impetus
05/16/2019 |
The yield curve inverts if the short end rises above the long end, or if the long end declines below the short end. In the former, the Fed is raising rates to reduce inflation and accidentally drives us into recession. The latter, which we are increasingly experiencing, occurs when growth and inflation expectations tank, and can be “fixed” by lowering short rates and eliminating the inversion! Much less serious.