The Inversion of the Yield Curve in the Spotlight

Last week the major indices of the western trading world, in contra distinction to the eastern markets, were down between 1 and 4 percent on the week. No small sum of value vaporized. Spooked by the left-right combination of hard body blow of the announcement that yield curves had inverted and the peppering to the head of the world’s traders that corporate profits as well a worldwide economic activity was slowing down, traders withdrew their funds from stocks and moved them to fixed income instruments like bank deposits and bonds. The implications for future growth are significant, as a reduction in capital available for future investment will likely cause a slowdown.