Time Navigation: When the Future is Cheaper than Now
The yield curve compares short-term bond rates (2-year) with long-term rates (10-year). In normal conditions, long-term bonds pay more. However, when an 'Inversion' occurs, it is a classic early warning signal for a recession.
Inversion (Storm Signal)
Occurs when short-term rates are higher than long-term. Investors accept lower long-term yields for safety, signaling fear about the future.
Steepening (Recovery)
The curve starts returning to its normal position. Often happens when the economy slows and the central bank prepares to aggressively cut rates.
Core Question: 'Has the yield curve returned to normal (disinverted), and what does it mean for the market?'