While the U.S. stock market, valued at roughly $30 trillion, may get more press, analysts know the biggest and most well-informed investors are found in the U.S. bond market where the total amount of debt owed through bonds is more than $40 trillion. And this week, the bond market just flashed its biggest recession warning sign since before the financial crisis. Specifically, the yield curve - which shows the interest rates of treasury securities by duration - inverted, meaning that short-term government fixed income yields are now higher than some longer-duration parts of the curve. The move is seen as a sign that growth is anticipated to be higher now than in the future. Analysts note that an inverted yield curve does not mean a recession is imminent, or even guaranteed, just that one is likely over the next year or so.
Shifting Yield Curve
| March 25, 2019