An inverted yield curve is an indicator of the possibility of a future recession, and also creates implications for investors and market participants. Currently, the U.S. government is in a sudden, and steeply inverted yield curve environment. In this week’s episode of Grow Money Business, Grant discusses the yield curve, how it predicts a future recession, the market impact of long-term debt, and more.
Show Notes
[02.22] Yield curve – Grant starts off the conversation by explaining what the yield curve is and how it works.
[08.35] Investment risks – Grant dives into different risks with investing in U.S. government bonds.
[10.37] Predicting the future – Grant shares the recession prediction due to the higher rate of short-term debt.
[11.36] Inverted yield curve – Grant shares the percentages of short and long-term debt rates.
[15.46] Research – Grant dives into the research details of Fama and Kenneth in 2019 about ‘Inverted Yield Curves and Expected Stock Returns.’
[22.00] Investing long-term – Grant shares how investing in the long-term solves many problems and will lead investors to the best outcomes.
Resources
Inverted Yield Curves and Expected Stock Returns –
Yield Curve Inversion Reaches New Extremes –
wsj.com/articles/yield-curve-inversion-reaches-new-extremes-11669687278
Explainer: U.S. yield curve inversion – What is it telling us? –
reuters.com/business/finance/us-yield-curve-inversion-what-is-it-telling-us-2022-03-29/