( financial news, but not personal, it's about the bond market losing its shit )
roommate: ".......so what's an inverted yield curve? i thought the stock market was the big deal"
me: "......if you're hearing about it now that's not good news"
also me: "gdi why am i the financial news person in the house?"
roommate: ".......so what's an inverted yield curve? i thought the stock market was the big deal"
me: "......if you're hearing about it now that's not good news"
also me: "gdi why am i the financial news person in the house?"
SO!!!! for those interested:
the stock market is not the most important predictor of national economic measure
think of it like this: it's like peaking into a small moment of time into a business, and tbh anything. an make it go up or down
so when you hear the dow plunges, that's not as much to freak out about over long term tbh
when stocks go up, a business is having a good day, when it goes down, it's not, but literally anything can make it all fluctuate
now, the bond market on the other hand, that is the measure of national economics
that's like looking into years of the business of government rather than just moments into companies
we're talking trillions of dollars
a yield curve is basically like this: you have your most important bonds in the us treasury-- 3 months, 2 years, 10 years
the longer the contract to borrow means you should have more yield. say you buy 10 year bonds. you're not getting paid back for 10 years so of course you should get more back
verses like 3 months where the interest is much less than 10 years
an inverted yield curve is when you can make way more money on say the 3 month bond contract instead of the 10 year
and that's not good news bc within the next year or two a recession happens
that's extremely simplified, but more or less the gist of it
and when you hear about it in the news that's never good because. well duh. recession if something isn't done to fix it
(plus you just don't hear about it often because that's not supposed to be the norm)
so there you go, if you've been hearing about it and have no idea wtf that's about, that's what an inverted yield curve is and why it's not good
things can be done to fix an inverted yield curve, so it's not good news, but it's also not the end of the world. it's just a sign to look at and go "YO FFS"
does the thing happen in the American bond market where bonds stop providing yields because of the economic situation and they are instead used to safely park money?
it used to, but in order to keep that from happening money market funds can only invest in certain high-quality, short-term bonds
like think less than three months
and if you don't pay it back for those bonds, things get ugly, so there's usually not a lot of incentive to park money with short term bonds
i could be wrong, but that's what i remember and with american's currently administration that could have changed without anyone really knowing because what is even happening anymore
it'd be too complicated to put in a twitter message <.<
lmfao p much