Why markets are taking notice of an inverted yield curve

Investors are weighing up whether the old economic metric is still effective against new market dynamics, while determining what the yield curve’s shape implies for investors in Asia.

Koichiko Koichiko
Aug 30, 2022 - 21:01
0 21
Why markets are taking notice of an inverted yield curve

Investors are weighing up whether the old economic metric is still effective against new market dynamics, while determining what the yield curve’s shape implies for investors in Asia.

August 30, 2022

As if there were not enough for markets to fret about. US inflationary pressure and rising costs are eroding corporate margins, offsetting any benefit of falling unemployment rates and rising wages. Overall, the data generally remains mixed, but when the spread between the two-year and ten-year yield curve inverted downward sloping in April, money managers began to take notice.

An inverted US yield curve, which occurs when long-term yields fall below those offered by shorter maturities, has often served as a leading recession indicator, with a lag of about four to eight quarters. Prior to April this year, the curve last inverted in 2019, amid slowing foreign growth and...

¬ Haymarket Media Limited. All rights reserved.

FinanceAsia has updated its subscription model.

Registered readers now have the opportunity to read 5 articles from our award-winning website for free.

To obtain unlimited access to our award-winning exclusive news and analysis, we offer subscription packages, including single user, team subscription (2-5 users), or office-wide licences.

To help you and your colleagues access our proprietary content, please contact us at [email protected], or +(852) 2122 5222

Markets Debt Equity #yield curve #inflation #us fed #margins #us yield curve