Haven’t read part 1 and part 2, then do that first.
Short term bonds mean that they’ll soon need to be redeemed for something new. When that happens, the money will need to be reinvested. As we go into a recession, rates on future bonds will most likely be lower than on the current ones. There isn’t as much interest in short term bonds because no one wants to be forced to invest in new bonds with lower yields. Thus, as interest in short term bonds wanes, the yield on them tends to increase (price goes down, yield goes up). An inversion is when the yield on longer term bonds is lower than the yields on short term bonds (more demand for 10 year bonds, less demand for 2 year bonds). An inversion is not the reason for a downturn or a recession, but sustained inversions have preceded almost every recession that has happened during the last 100 years. Currently, the yields on 2 and 10 years are very close to each other. This is a good metric to keep an eye on.
Here is the site I use to track current rates.
https://fred.stlouisfed.org/graph/?id=DGS10,DGS2
#bonds #yieldcurve #interestrates #investments #sentiment