The markets once again had a tumultuous week. Renewed concerns over trade wars, worries about additional interest rate hikes, and a global economic slowdown were some of the themes driving the volatility. Another key driver of this week’s market sell-off was the yield curve, which has been a hot topic lately because of its alleged usefulness as a leading economic indicator. The yield curve is often discussed in dramatic terms, including claims that whenever the yield curve inverts, a recession has followed. It sounds scary, but the yield curve can provide useful information about the state of the economy. To better understand what all the chatter is about, let’s begin with the basics.
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