Who is afraid of the inverted yield curve?

Ahead of this week's central bankers meeting in Jackson Hole, many questions are being asked about what to make of this market signal and what can be done about it.

ST ILLUSTRATION: MANNY FRANCISCO
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The nearest thing the global economy has to a doomsday clock ticked a little closer to midnight this past week, triggering fear across financial markets.

Last Wednesday, the US yield curve - the slope formed by the interest rate paid by Treasury bonds of various maturities - turned upside-down for the first time since the summer of 2007, with the US government now paying less to borrow for 10 years than two years.

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A version of this article appeared in the print edition of The Straits Times on August 19, 2019, with the headline Who is afraid of the inverted yield curve?. Subscribe