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The yield curve has reversed! – Mother Jones



In general, the yield on a 5-year government bond should be higher than on a 3-year government bond. In the longer term, that means you take a bit more risk. Today, after years of breathless waiting, this is no longer true. The yield curve has "inverted," and when typing, both 3- and 5-year bonds have returned 2.84 percent.

Popular opinion is that investors are counting on the Fed to cut rates in the near future. As interest rates are lower around the corner, investors want to set the currently available higher interest rates as long as they can so they can catch 5-year treasury bills, which in turn has lowered the yield below the 3-year interest rate. 1

9659003] It all makes sense, but why do investors believe the Fed will cut interest rates soon? Because a recession is coming.

That's conventional wisdom anyway. You can decide for yourself if you want to believe it.


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