Monday, May 23, 2016

Yield curve: Correlation vs. causation edition

Further to my last post (see Three steps and a stumble?), I would like to clear up some misconceptions about how I interpret the yield curve and its investment implications. Much of the confusion revolves around the idea of correlation vs. causation. Yield curve inversions don't cause anything. Yield curve inversions are a signal (correlation) of certain effects that have important investment implications.

In this post, I will address the following topics:
  • Yield curve and recessions
  • Yield curve and credit conditions
  • Yield curve and equity bear markets
The full post can be found at our new site here.






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