Question

Look up the current yield curve from the US Treasury site and research yield curve implications for recessional or boom market climates. What do you interpret from the yield curve and provide an opinion on what you expect with regard to the future economy and rates?

Answer 1

At present the long term yield curve is declining while the short term yield curve is flat. As the short term yields are higher than the long term yields it implies that it could indicate recession. This is because the people have lesser confidence in the market and the longer the maturity lesser is the yield. They will hence be reluctant to invest long term and this is detrimental to the growth of the economy.

By this trend it seems that the future economic conditions will not be conducive to growth. The rates will delcine in long term.