This Recession Indicator Just Changed Course -- and It Might Be Bad News for Your Retirement Account
If you're not paying attention to the yield curve, then you're probably missing important indicators for your retirement account's performance. Last month, the yield curve sent out an ominous signal that's likely to impact the stock and bond markets in the next few months. As important economic news hits the headlines, your retirement account is likely to react. Make sure that you're ready to manage it through whatever comes next.
The yield curve is a high-profile indicator for both the stock market and the economy. However, many investors don't know how to interpret the metric, despite its importance. In short, the curve measures the difference between yields on similar bonds with different maturity dates, based on market prices for those bonds. The most commonly cited yield curve refers to U.S. Treasuries, comparing yields across maturities ranging from one month to up to 30 years.
A "steep" yield curve suggests that longer-duration bonds have higher rates than shorter-duration bonds. A flat curve suggests that there's a relatively small difference across durations. An inverted yield curve is a somewhat rare situation in which shorter-duration bonds yield higher rates than their longer-term counterparts.
Source Fool.com
