Tumbling Stocks Show You Can't Ignore the ‘Harbinger of Doom’
- Yield curve woes infecting markets from equities to dollar
- Shares at risk from drivers behind inversion; EM may benefit
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U.S. stocks suffered the biggest rout in almost two months Tuesday, and among the primary culprits is a shift in how bond investors view risks to the economy.
Known as the inversion of the yield curve, where short-term interest rates climb above longer-dated ones, the signal is considered among the best predictors of a future slowdown. One relationship, the spread between three- and five-year Treasury yields turned negative for the first time in more than a decade Monday.