Stock market, treasury bonds, recession, interest rates, inverted yield curve?!?! What does all the financial jargon mean to your money?
An inverted yield curve deals with the bond market. Bond holders get paid more, or have a higher yield, on long term bonds versus short term bonds.
Why? Because long term bonds require people to lock up their money for a longer period of time, you get compensated for that!
But now, for the first time since the 2007 recession. The yield or the compensation for the 10 year long term bond dipped below the short 2 year bond. Which means investors are more willing to bet on the short term economy.
“So, an inverted yield curve can be a signal that things will slow down in the future, and has often been a sign of recession,” says CBS money expert Jill Schlesinger.
The yield curve has inverted before every recession since the 50's. It's not an immediate thing, usually you have to wait 18 months for it to make impact. But, it may not happen at all.
What is likely to happen in the near future, the federal reserve will probably cut interest rates, that means if you're in the market for a house or need to refinance, this is your time.