2min chapter

Planet Money cover image

Two innovation market indicators

Planet Money

CHAPTER

The Inverted Yield Curve

Short term rates that are higher than long term rates is bad news. Cable looked at when the interest rate on three month treasuries was higher than the 10 year treasuries, and he found that when this difference persisted for a full calendar quarter, eventually economic growth would start to plunge. The yield curve inverted towards the end of 2022, and it stayed inverted. But maybe it's a bit ironic given that I am the person that discovered the indicator. And I believe there's a real chance of avoiding a recession and for the model to have a false signal.

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