Three Things to Watch for With a Flattening Yield Curve

The video discusses the implications of an inverted yield curve, often seen as a recession predictor. It explores factors affecting the yield curve, such as the Fed's balance sheet and Treasury issuance. The San Francisco Fed's perspective on yield curve flattening is analyzed, emphasizing the recession risk. The video concludes with potential Fed actions in response to yield curve changes, highlighting the importance of monitoring economic indicators.

What is one reason an inverted yield curve can lead to a recession?

• It boosts stock market performance.

• It causes banks to stop the lending process.

• It encourages banks to lend more.

• It increases consumer spending.

Which of the following is NOT a factor that can influence the yield curve?

• Federal Reserve's balance sheet composition

• Actions by other central banks

• Treasury issuance focus

• Consumer confidence index

According to the San Francisco Fed, what should forecasters not ignore when analyzing the yield curve?

• The reasons for the long end being down

• The stock market trends

• The short-term interest rates

• The presumed macro financial effects of QE

What part of the yield curve is most popular to look at according to the discussion?

• One year versus five years

• Five years versus twenty years

• Two years versus ten years

• Three months versus ten years

How might the Federal Reserve respond to a flattening yield curve?

• By focusing solely on inflation rates

• By increasing the rate of rate hikes

• By slowing down the rate hike process

• By ignoring the yield curve changes