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Posted: 1/3/2006 6:11:44 AM EDT
It seems like every day on Larry Kudlow, he talks about the damn yield curve.

And about half the time during the morning shows on CNBC someone will mention the yield curve.

Why does it matter? It's got something to do with short term bonds yielding as much as long term, right?
Link Posted: 1/3/2006 6:26:37 AM EDT
Link Posted: 1/3/2006 6:28:55 AM EDT
How does the short term rate get higher than the long term rate?

The Fed sets a rate at which banks can get money. So they set the long term rate, right?

What pressures would push the short term rate higher?
Link Posted: 1/3/2006 6:39:47 AM EDT
crazyquik: Many orgnizations run on short-term borrowlng.
Link Posted: 1/3/2006 6:45:01 AM EDT
The last time the yield curve was inverted was in the spring of 2000 when Greenspan kept hiking Fed funds rate up to something like 8% in May 2000. A few months later the S&P started tumbling, telegraphing the approaching recession.
Link Posted: 1/3/2006 6:49:25 AM EDT
[Last Edit: 1/3/2006 6:54:18 AM EDT by lordtrader]
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