The yield curve is a graphical representation of the yields, or interest rates, of bonds with different maturities. Typically, the yield curve slopes upwards, with longer-term bonds having higher yields than shorter-term bonds. An inverted yield curve occurs when the opposite is true, with shorter-term bonds having higher yields than longer-term bonds. This deviation from the typical pattern can be a warning sign of an upcoming recession.
In the past, an inverted yield curve in the United States has consistently been followed by a recession. For example, the yield curve inverted in 2000 and 2007, preceding the Dot-Com Bubble and Great Recession, respectively. The yield curve also inverted in 1966 and 1969, preceding recessions in the 1970s.
Recently, the global yield curve has inverted for the first time ever, with 26 countries, including the US, UK, Canada, and Hong Kong, all experiencing this phenomenon. This marks a major shift in the normal pattern and suggests that something significant is occurring in the global economy. The inversion is also accompanied by rising interest rates, which could potentially lead to a financial crisis rather than just a recession.
It is important to be prepared for these kinds of economic events. To learn more about the yield curve and how to prepare for a potential financial crisis, watch the video above.
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About ITM Trading: For the past 27 years, ITM Trading & Lynette Zang have been helping individuals uncover the truth about complex Financial Banking, Currencies, and Economic Systems while building strategic and tangible Gold & Silver portfolios to withstand any economic crisis for their clients.