Mar 25, 2024 - Economy

What the perennially inverted yield curve means

Data: FRED; Chart: Axios Visuals

The U.S. yield curve has now been inverted — meaning that 10-year Treasuries yield less than their two-year counterparts — for a record 628 days.

Why it matters: As a recession predictor, the amount of time spent inverted is irrelevant. Think of this milestone more as a broader indicator of how long things have been out of whack in the Treasury market.

Between the lines: Davide Barbuscia of Reuters explains that an inverted curve is important regardless of its predictive power.

  • "An inverted yield curve is also by itself typically bad for economic activity and financial markets because higher short-term yields lift borrowing costs on consumer and commercial loans, while lower compensation for long-term lending discourages risk-taking."
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