The situation on the bond market indicates the approach of the economic crisis in the US

The bond market in the United States shows indicators that warn of an imminent economic crisis in the country.

Фото: Depositphotos

For the first time in the last decade, part of the yield curve for bonds has inverted, writes Time.

December 3, the yield on 5-year Treasury bonds became lower than the yield on shorter-term 3-year bonds.

With a healthy economic situation, long-term bonds give a higher yield, since investors require additional compensation in exchange for leaving their money in bonds for longer periods of time, that is, they actually lose access to them for a longer time.

However, when investors expect interest rates to fall in the future—usually due to a weakening economy—they try to lock in currently high bond rates for as long as possible. These efforts often cause yields on long-term bonds to fall, sometimes below rates on short-term investments, resulting in an inversion of the yield curve.

The inverted yield curve is often a precursor to economic recession, although most experts tend to more closely monitor the difference in yield between 10-year and 2-year or 3-month treasury bonds, rather than three- and five-year.

However, an inversion on any part of the yield curve can be a warning sign. The yield curve for these bonds last inverted in August 2005, 28 months before the recession began.

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