Business Report: Howard Dicus explains the 'Yield Curve Inversion' in economics

It’s time for Howard’s Illustrated Economics. This morning: the yield curve inversion. The bond recession is signaling an economic stallout. But how reliable a signal is it. They call it a yield curve inversion. It’s not as complicated as it sounds. And it’s not magic. When people are slow to buy bonds, the Treasury raises the interest rate payoff until they DO buy. In bad times, when people put money in the relative safety of bonds, the opposite happens. As more bonds are sought and bought, the Treasury gets away with a LOWER interest rate payoff. Long-term bonds usually reward patient investors with a higher return. But if enough people buy them, the return on a 10-year note can fall BELOW a two-year note. That’s a yield curve inversion. This all stems from decisions made by humans based on their feelings about the economy. It’s like an opinion poll, except you put your money where your mouth is. It’s not nothing. But it’s also not magic.

Business Report: Howard Dicus explains the 'Yield Curve Inversion' in economics