FT News Briefing Can the yield curve still predict recessions?
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Jan 23, 2024 The inverted yield curve is causing waves of concern in the US economy. Fujitsu finds itself embroiled in the UK Post Office scandal, raising questions about corporate accountability. Meanwhile, the SEC faces backlash after a recent hack tied to a SIM swap, underscoring the urgency for better security in the crypto sphere. The discussion reveals the yield curve's historical role as a recession predictor and hints at the financial fallout for companies linked to scandals. Don't miss the announcement of a new podcast focusing on U.S. politics!
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Inverted Yield Curve Concerns
- The U.S. economy shows positive signs with lower inflation and a rising stock market.
- However, an inverted yield curve, a reliable recession indicator, raises concerns.
Inverted Yield Curve Explained
- A yield curve is inverted when long-term interest rates are lower than short-term rates.
- This signals an economic problem, as it defies the normal risk-reward relationship.
Yield Curve and Recession
- An inverted yield curve suggests investors are more willing to lock in lower long-term rates.
- This indicates low confidence in short-term economic prospects.