Covered Bonds
February 12, 2025
What the Resignation of Urjit Patel Means for the Corporate Regulator Tussle in India Recently, in India, the RBI or the Reserve Bank of India and its former governor, Urjit Patel, were in the news for their resistance to encroachment on their powers by the Government of India. Separately, the RBI and Patel were also […]
Individual investors are well aware of the existence of pension funds. Retail investors who earn their income in the form of a salary are likely to have invested in these funds. Other retail investors may also have invested in these funds. Almost everyone has heard about pension funds in the news. However, very few people […]
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Gold has always been the alternative asset class. Whenever people lose faith in the value of the stocks that they are holding or even in the value of any currency, they typically sell their holdings and invest the proceeds in gold. However, of late, Bitcoin has burst onto the scene. Gold is no longer the […]
Most investors across the world are aware of the fact that yield curves are generally upward sloping. This is because, under normal circumstances, yields for bonds with longer maturities tend to be higher. However, it is possible for the opposite scenario to play out. This means that it is possible for bonds with lower maturities to command higher yields than bonds with higher maturity. This is an abnormal situation that occurs only a few times in several years. This phenomenon is called an inverted yield curve and it is considered to be very important from an investor’s point of view.
The details about the inverted yield curve have also been explained in this article.
Since an inverted yield curve is an abnormal situation, it is important to understand why it arises.
The occurrence of an inverted yield curve is considered to be a big issue. As soon as this yield curve is spotted, it becomes part of the news. The reason behind the importance given to the yield curve is listed below:
The effects of the inverted yield curve are so significant, that their impact does not remain restricted to the bond market. Some of the details have been listed below:
To sum it up, an inverted yield curve is considered to be a major economic event. Almost all financial markets in the world are impacted by inverted yield curves in the long run.
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