Inverted yield curve

 Here’s the key points to understand:

 An inverted yield curve means interest rates have flipped on U.S. Treasury’s with short-term bonds paying more than long-term bonds.

It’s generally regarded as a warning sign for the economy and the markets.

A recession, if it comes at all, usually appears many months after a yield curve inversion.

One reason inversions happen is because investors are selling stocks and shifting their money to bonds. They’ve lost confidence in the economy and believe the small returns that bonds offer might be better than potential losses they could incur by holding stocks into a recession. So, demand for bonds goes up and the yields they pay go down.

An inverted yield curve, like most other indicators, is not perfect and doesn’t mean a recession is imminent. However, between that and the rising amount of negative-yielding debt in the world, strange things are happening with the bond market these days, and that’s what’s got investors on edge. For consumers, it’s reason for caution but not panic.

If you’re nearing retirement having at least a portion of your retirement income safe, from the volatility of the market is a good idea. Call me for an appointment 320-679-5183.