Treasury bond yield inversions have been long seen as a strong indicator of recessions to come within one to two years. But the academic who, in his 1986 doctoral dissertation, first investigated and expanded on these relationships now says things have changed.
Campbell Harvey, a Duke University finance professor, told MarketWatch that the immediate future may be more so-called soft landing than crash.
Typically, when shorter-term Treasury rates are higher than longer-term, investors are taken as telegraphing that they have more confidence in the near-term economic outlook and that they expect conditions will get worse over time. So, they want higher interest rates in the short run to tie up their money in what they see as turbulent times with more perceived risk.
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