The Yield Curve Just Inverted...Now What?

With rising inflation and now an inverted yield curve, are we headed towards a recession? The interest rate paid on our short-term debt has exceeded the interest paid on our long-term debt of the same quality. So, what does this mean for investors? On today’s episode we’ll unpack the inverted yield curve, the concerns investors should be aware of, what to anticipate for the remainder of the year, and the strategies you can implement to protect your plan now and in the future. 

This inverted yield curve and a contraction in the market could indicate a coming recession, but this is not absolute. We are in a unique situation as we usually don’t see rising interest rates and a contraction in the market at the same time. Typically, when markets contract on the equity side we can find safety in bonds but with rising interest rates that might not be the case this time. However, it’s always important to keep your perspective in check and prevent yourself from making quick, emotional reactions to the market. 

The best move to make right now may to be make no move at all. We want to take a long-term view when it comes to our plan. Don’t let news cycles scare you into making poor decisions. If a recession does happen it doesn’t ensure the U.S. stock market will underperform but it’s still important to be prepared. With this volatility, it’s essential to have a balanced portfolio that outpaces inflation while simultaneously withstanding market turns. 

Review the article mentioned in today’s show >> 

 

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