Aug 16, 2019

What's this Yield Curve - are we in trouble?

Yield Curve is a line that plots interest rates. It is used as an economic benchmark for other debt in the market, such as mortgage rates or bank lending rates, and is used to predict changes in economic output and growth. So ...
  • normally long-term (LT) bonds rates are higher than short-term (ST) rates
  • an 'inverted' yield curve has long term rates below short term rates
  • long term rates fall as investors attempt to lock-in higher rates 
  • when (LT) rates fall below (ST) rates - a 'potential' recession is indicated

What do we do .. (web search and discussion w/Advisors)
  • remember that no one can predict the market! 
  • remember the market has been and will always be volatile
  • remember the market has always recovered after a correction
  • an inverted yield curve is not an absolute recession predictor
  • best plan - have a diversified portfolio based on your risk profile
  • do not sell or become emotional - ride it out

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