Why Inverted Yield Curve Panic Is Overdone
In case you haven't heard by now, the "2-and-10" yield curve momentarily inverted this week. Some market participants and financial media have responded with alarm, and given this signal's singular track record of predicting U.S. recessions, that's not exactly the wrong reaction.
But it's not necessarily helpful, either.
Although an inverted yield curve is as reliable an indicator of looming economic downturn as we have, no one data point is ever infallible. It's also the case that inverted yield curves are wildly imprecise at forecasting the onset of recession.
Further complicating matters is that while the four most dangerous words in investing are "this time it's different," some experts argue
