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 LOL: What's a yield curve inversion and why is everyone freaking out?

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PostSubject: LOL: What's a yield curve inversion and why is everyone freaking out?   Tue Dec 04, 2018 9:52 pm

Sound the alarms, man the battlements, and gird your loins for the next recession. The yield curve has inverted.
Anxious headlines blared the news across the financial media. The U.S. dollar dropped on Tuesday, spooked by recession fears, and the Dow Jones Industrial Average plunged a stomach-turning 800 points — making Tuesday one of the stock market's worst days of 2018. "Bond king" and Doubleline CEO Jeffrey Gundlach declared that the "economy is poised to weaken."



Okay, you're probably wondering, what in God's name is the yield curve? For that matter, what do you mean it "inverted?" Who cares? What does any of this have to do with a recession?
Glad you asked.
It's actually simpler than it sounds. The yield is just the return on investment someone gets from buying a bond. The yield curve is just the difference between yields on two different bonds that have the same quality, but different maturity dates. Yields on 10-year Treasury bonds minus yields on 2-year Treasury bonds is a particularly common example. (It's called a yield "curve" because of how the relationship is sometimes presented in financial analysis.)

https://theweek.com/articles/810793/whats-yield-curve-inversion-why-everyone-freaking
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