What happens when the yield curve inverts?

Matt Freund of Calamos Investments

Matt Freund of Calamos Investments

We expect the Federal Reserve to maintain its gradual tightening as the US economy extends its growth phase, with short-term rates likely to rise at least three more times to reach 2.5% by next year.

The yield curve has been moving toward inversion for many years now, and the economy has kept going while the pressures have built. What does the remainder of 2018 hold for investors? Once the curve inverts, historically we have seen lags of months between inversion and recession.  An inverted yield curve is not a reason to rewrite all the fundamental principles of long-term investing. It is also not a switch that moves the economy from growth to recession overnight.  Right now, there are other positive factors that have to be balanced against an inverted curve - including tax r...

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