The Inverted Yield Curve
InvestorGeeks had a nice article on why the yield curve is inverted (meaning the yield on short-term bonds is higher than the yield on long-term bonds, for example the yield on the 2-year bond is 4.37% while the yield on the 10-year bond is 4.35%).
Ok, so our yield curve is inverted because long-term rates have been dropping (or in reality lagging behind short-term rates as the Fed hikes interest rates) “to reflect moderating inflation worries�. We’d only have to worry if the inversion was due to short-term rates increasing
January 6th, 2006 at 5:30 pm
Thanks for the link!
My article on the yield curve should give people some insight into my journey through the web as I tried to figure out why the yield curve was an inverted and what that means for investors.
Readers who want to get to the heart of the matter right away should take a look at the article I reference last in my post:
Too fast, too soft… investor beware by Katie Benner
http://money.cnn.com/2005/07/14/markets/bondcenter/yields_investors/