The main measure of the yield curve briefly inverted Wednesday— with the yield on the 10-year Treasury note falling below the yield on the 2-year note — and rattled stocks and other markets by underlining investor worries over a potential recession.
But while inversions are seen as a reliable recession indicator, investors may be pushing the panic button prematurely. Here’s a look at what happened and what it might mean for financial markets.
What’s the yield curve?
The yield curve is a line plotting out yields across maturities. Typically, it slopes upward, with investors demanding more compensation to hold a note or bond for a longer period given the risk of inflation and other uncertainties.[Read full article @ MarketWatch.com]