We discussed the term structure and yield curve last week. Yields on longer-term U.S. Treasurys have fallen further below those on short-term bonds than at any time in decades, a sign that investors think the Federal Reserve is close to winning its inflation battle regardless of the cost to economic activity. (please refer to the article: "Yield Curve Inversion Reaches New Extreme" under this week's reading assignment folder and the WSJ video" Why Inflation Has Lasted for So Long" https://www.wsj.com/video/series/news-explainers/why-inflation-has-lasted-for-so-long/5CAFFC5A-BBDC-4B6C-A34E-57491576E9B9).What does an inverted yield curve indicate about the market's future expectations for short-term interest rates, and why? Does the current shape of the yield curve indicate an impending recession or that the Fed is winning the war against inflation and the economic outlook is stabilizing? In your opinion, will the economy be in trouble in the next 6-12 months? Please discuss.

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Answer An inverted yield curve occurs when yields on longerterm bonds fall below those of shorterterm bonds This is often interpreted as a signal that ... View the full answer