As you’ve probably heard by now, the most notable event the past week in financial markets was the “inversion of the yield curve”.
Basics: What is a Yield Curve Inversion?Very simply, a yield curve inversion happens when the interest rates of short term bonds (eg. 3 months bond, 1 year bonds, 2 year bonds) is higher than the interest rates of long term bonds (eg. 10 year bonds).
What happened the past week, was that the yield curve for US treasuries (the 3s10s, which is the 3 month treasury yield against the 10 year treasury yield) inverted for the first time since 2007. And we all know what happened following the last yield curve
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