Why investors should stop worrying about the yield curve

After "inverting" and sparking talk of impending recession earlier this year, the yield curve on US government debt has returned to a more normal pattern.

Trader at the New York Stock Exchange © Drew Angerer/Getty Images

Investors are back in "risk-on" mode, propelling US stocks to new highs
(Image credit: Trader at the New York Stock Exchange © Drew Angerer/Getty Images)

"False alarm?" The inversion of the US yield curve sparked talk of impending recession earlier this year, says The Economist. Yet yields on US government debt have returned to a more normal pattern since mid-October. The curve completely uninverted for the first time in a year earlier this month. Financial markets are "celebrating a bullet dodged". US indices have been hitting new all-time highs in recent weeks as investors go back into "risk-on" mode. The Dow Jones index has gained 4.5% in the past month; the S&P 500 has risen 24% so far this year. But "the bullet may still be on its way".

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Markets editor

Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019. 

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere. 

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful. 

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.