Are we headed for another recession? The yield curve is at its flattest since 2007, before the Global Financial Crisis…
You may or may not already have heard that the U.S. treasury yield curve is at its flattest since 2007 – the year before the 2008/09 Global Financial Crisis. Is this a potential sign of things to come?
But before I delve into that, I guess a bit of background information is in order.
What is the yield curve?
The yield curve shows the spread (difference) between the interest rates of short-term and long-term U.S. Treasury bonds. For example, the current interest rate for the 10-year U.S. Treasury bond is 2.83% and the interest rate for the one-year U.S. Treasury bond is 2.33%, therefore the spread is 0.5 percentage points.
Usually, interest rates for long-term bonds are higher than for short-term bonds. And rightly so because investors demand a higher yield for locking their money away for a longer period of time, which ......