Covered Bonds
February 12, 2025
What is a Currency War ? A currency war is a situation wherein devaluation of currency by one country is retaliated by a competitive devaluation from the other country. For instance if the United States were to devalue the dollar against the Pound Sterling and if the British retaliated with their own devaluation then the […]
In our day-to-day life, we often use the term unicorn to refer to a mythical horse-like creature. In the year 2013, a venture capital investor named Aileen Lee borrowed the term to describe a particular kind of startup company. The unicorn term was used to describe the startup companies which were thought to be so […]
The retail business is inherently a cash flow positive business. This is generally because of the fact that retailers are generally able to procure their stock on credit. However, when it comes to liquidating their stock in the form of sales, retailers generally receive payments in the form of cash or credit cards. Hence, receivables […]
Traditional financial theories assume that finance is a scientific field. This means that just like in a scientific problem, a perfect solution exists even for financial problems as well. According to them, investors have the necessary resources and are capable of finding a solution to every problem in the financial domain. In reality, this is […]
In order to be successful at investing, an investor not only needs to have mastery over their numbers, but they also need to have mastery over their emotions as well. In the past few articles, we have already discussed how emotional biases can lead to suboptimal performance in investing. In this article, we will try […]
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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