US inverted yield curve: Economic recession indicator suggests difficult times ahead

Table of Content

1. OVERVIEW
1.1. Catalyst
1.2. Summary

2. THE US YIELD CURVE AS AN EFFECTIVE RECESSION INDICATOR
2.1. The yield curve displays the difference between older and younger bonds
2.2. The yield curve is an expression of bond investors’ behavior

3. REAL LIFE IMPLICATIONS OF AN INVERTED YIELD CURVE
3.1. Pessimistic behavior alongside with herding and fear of missing out effect invert the yield curve
3.2. An inverted yield curve has a big impact on fixed-income investors, consumers and financial institutions

4. HISTORICAL ANALYSIS INDICATES THAT AN INVERTED YIELD CURVES SIGNALS RECESSION
4.1. Negative term spread is the real indicator of a recession
4.2. The US economy is currently under threat

5. APPENDIX
5.1. Abbreviations and acronyms
5.2. Sources
5.3. Further reading

6. ASK THE ANALYST

7. ABOUT MARKETLINE

List of Figures

Figure 1: Yield curve with an upward trend
Figure 2: Yield curve with an downward trend or inverted yield curve
Figure 3: Herding effect in the stock market
Figure 4: The term spread and recessions

List of Tables