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What is the inverted yield curve and how is it a US recession indicator?
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The yield on the three-month US Treasury is around 4.7 per cent, while the 10-year yield is about 3.6 per cent.
PHOTO: REUTERS
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The yield curve of the United States Treasury bonds usually slopes upwards, showing that bonds with longer-dated maturities have higher yields than those with a shorter period to maturity.
The argument goes: Investors need more compensation for keeping their money tied up longer, as there is a higher chance of risk over this longer timeframe.
