by mrmrmrj
This chart demonstrates the historical relationship between yield curve inversions and subsequent recessions. As you can see, there is a strong correlation between the two phenomena. In other words, when the yield curve inverted (i.e., when short-term interest rates rose above long-term interest rates), a recession soon followed. This suggests that an inverted yield curve may be a leading indicator of economic slowdown or even recession.
There is a bit of a lag from the initial inversion to the recession’s start normally.
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