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How U.S. Bond Yield Curve Invert Relate to the Upcoming Financial Crisis
- 1 Shenzhen International Foundation College
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Abstract
This passage is mainly based on the current global economic situation as well as the association with historical events to discuss the formation of an inverted yield curve in U.S. bonds and being an indicator of a financial crisis, how the inverted yield curve of the U.S. bonds can relate to the upcoming financial crisis. By analyzing the current economic performance and the public’s psychological health after the epidemic era, a disappointing conclusion can be induced: a financial crisis may happen in the short future. Such a guess is based on the central bank’s action of consistently increasing interest rates and the public’s unoptimistic outlook on the macroeconomic circumstances, which is also the reason that causes the occurrence of the phenomenon of the inverted yield curve of the US bonds. Associating with the rising stock market in the US, it is obvious that a huge financial bubble already formed. The government chooses the strategy of “Minsky Moment” to deal with the coming problems. The current situation is challenged by multi-factors and if the government cannot adjust its policies to deal with these multi-factors properly, the whole financial bubble will collapse and bring a catastrophe that is bigger than ever.
Keywords
US bond yield curve inverted, financial bubble, increased interest rate
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Cite this article
Liu,Z. (2024). How U.S. Bond Yield Curve Invert Relate to the Upcoming Financial Crisis. Advances in Economics, Management and Political Sciences,60,160-171.
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