Finance Theory — 7.1: Yield Curves and Economic Prediction

The yield curve has inverted before every U.S. recession in the past two decades—2001, 2008, and 2020. This video breaks down exactly how Treasury bond yields across different maturities form this predictive signal, why inversions occur, and what the current curve shape tells us about investor expectations for the economy.

Key concepts covered:
• How yield curves plot Treasury bond yields across maturities from months to decades
• The flight-to-safety mechanism: why fear drives Treasury yields down
• Why long-term yields track inflation expectations
• Market prices as weighted collective belief, not truth
• Yield curve inversion mechanics: what it means when short-term yields exceed long-term
• The 10-year minus 2-year spread as a recession indicator
• How to track the yield curve yourself using FRED data

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SOURCE MATERIALS
The source materials for this video are from https://www.youtube.com/watch?v=ZWKnK9LIETA

Видео Finance Theory — 7.1: Yield Curves and Economic Prediction канала Ludium