Significance of an Inverted Yield Curve as a Recession Signal

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An inverted yield curve indicates that the interest rate on short-term loans exceeds that of long-term loans. This phenomenon, particularly on US Treasuries, is used as a signal for a recession due to its historical reliability. Since 1960, the inverted yield curve has accurately predicted recessions, with only one false signal.

An inverted yield curve is sending jitters across the US economy, Japanese IT conglomerate Fujitsu is in hot water over its involvement in the UK Post Office scandal, and new details have emerged over how the SEC’s X account was hacked.

Mentioned in this podcast:

UK Post Office scandal exposes risks of Fujitsu’s hands-off approach

Yield curve adds to mystery over US economy

SEC says bitcoin X breach came after phone number was swapped

The FT News Briefing is produced by Fiona Symon, Sonja Hutson, Kasia Broussalian and Marc Filippino. Additional help by Sam Giovinco, Peter Barber, Michael Lello, David da Silva, Gavin Kallmann, and Josh Gabert-Doyon. Our engineer is Monica Lopez. Topher Forhecz is the FT’s executive producer. The FT’s global head of audio is Cheryl Brumley. The show’s theme song is by Metaphor Music.

Read a transcript of this episode on FT.com

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