ET Prime Special: Macro the mightiest - Part 8: How to read the yield curve, and use it to gain an edge in the markets

This series is for investors who are keen to understand the nuts and bolts of an economy. Now, investors are constantly searching for a reliable crystal ball that accurately predicts the future. While no indicator is perfect, one has come closer than any other: The yield curve. A specific, peculiar behaviour of the yield curve, known as an inversion, has preceded most major economic recessions in the US. When this happens, it’s as if the bond market – often considered the “smart money” in the room – is sending a powerful signal that economic trouble lies ahead. In this series, Macro the Mightiest, we discuss one macroeconomic factor every fortnight. Even a basic understanding will tell you when to react and when not to react to macroeconomic headlines.