5 Economic Indicators To Understand

2. Bond Yield Curves.

In a normally functioning economic expansion, the spread should be stable or widening. In theory, you should receive more interest for locking your money up in a 10-year bond than a two-year. However, in a contracting economy, that spread typically narrows and often a recession is around the corner if the spread goes negative, meaning if the two-year bond is yielding more than a 10-year bond, economic prospects over the coming years are not rosy.