, Columnist
Yield Curve Is Often Right But for the Wrong Reasons
An inversion often comes before a recession, but other economic factors are at play.
The curve is not a crystal ball.
Photographer: Christopher Furlong/Getty Images
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A key part of the U.S. yield curve inverted on Tuesday, which is a reliable indicator that a recession is coming. Or maybe not.
So as economists, strategists and investors race to figure out whether this rare event in the bond market means the economy is poised to contract, there are a few key things to consider. The first is that every recession since the 1950s has been preceded by an inverted yield curve, but not every inversion has preceded a recession.