Opinion

Why Wall Street freaks out when the yield curve inverts

An inverted yield curve is met with dread, so it’s probably worth an explanation to those not well versed in the ways of the bond market.

Jonathan ShapiroSenior reporter

Mar 31, 2022 – 11.05am

Email LinkedIn Twitter Facebook

Subscribe to gift this article

Gift 5 articles to anyone you choose each month when you subscribe.

Subscribe now

Already a subscriber?

On Wednesday, the bond market watched with peril as the yield on the US 10-year Treasury bond briefly dipped below that of the two-year benchmark bond. This was not long after the 30-year yield fell below the five-year yield for the first time since 2006.

One observer noted the sky should have turned dark and the oceans bubble, because an inverted yield curve spells doom.

Jonathan Shapiro writes about banking and finance, specialising in hedge funds, corporate debt, private equity and investment banking. He is based in Sydney.