Why Yield Curve Shines at Seeing the Future and Central Banks Don’t

Yield curve and demand for capital 1

Why the shape of a Yield Curve is a solid predictor of a recession (or a recovery)? I actually never heard a coherent explanation of why a flat or inverted Yield Curves signal recession so well. Typically 99% of answers to that question would center around what a Central Bank of a country would do and what investors think about its possible moves. It has some validity but the argument is incomplete. Continue reading “Why Yield Curve Shines at Seeing the Future and Central Banks Don’t”

Why Yield Curve Shines at Seeing the Future and Central Banks Don’t