Some investors believe that a recession warning that has been flashing on Wall Street for the past several months is wrong and that the Federal Reserve will be able to tame inflation and still escape a deep downturn.
The signal — called the yield curve — began suggesting last year that the economy was headed for a slump.
Typically, investors expect to be paid more interest for lending for longer periods of time, creating an upward sloping curve.
The inversion suggests that investors expect interest rates over time will fall from their current high level.
And that usually only happens when the economy needs propping up and the Fed decides to help by lowering interest rates.
Organizations:
Federal Reserve, Fed