Question

I want to ask about the yield curve as far as it pertains to its ability to predict the securities market. Should I personally rely on the yield curve, and specifically, its inversion, as a potential indicator of economic strife? Should I therefore potentially hold back funds I might invest in anticipation of a favorable buying opportunity in the future?

Answer 1

Yield curve is always a good indicator for determination of any kind of downturn in the economy because there would be an inverted yield curve at the time of an impending recession.

I would still recommend that one should not completely rely on the yield curve for investment because there are certain instance that yield curve has inverted but there would not have been any kind of recession because this inversion has been a cause of trading .

One should not completely base his investment upon inversion and flattering because that would lead to too much of dependency upon one factor and one should be investing by looking into various different sectors of the economy because there is some investment opportunity even in the economic downturn.