Widely anticipated by some, it’s at once feared, dismissed, worshipped and condemned in the multipolar world of money management. But no matter your view on the advent of the inverted yield curve, it’s here (or, at least it was), and has spawned fresh debate about what awaits in 2006.
But for all the deliberation on what it does or doesn’t mean, there are but two basic paths of reaction to an inverted yield curve. One, ignore the event, which paid an ignominious visit yesterday to the Treasury market for the first time in five years. Or, for those with darker inclinations, there is the traditional conclusion, namely, that a recession will soon follow.