{"id":38,"date":"2018-09-11T23:49:52","date_gmt":"2018-09-11T23:49:52","guid":{"rendered":"http:\/\/web.colby.edu\/cl4es\/?page_id=38"},"modified":"2019-08-27T20:38:17","modified_gmt":"2019-08-27T20:38:17","slug":"recession-monitor","status":"publish","type":"page","link":"https:\/\/web.colby.edu\/cl4es\/recession-monitor\/","title":{"rendered":"Yield Curve"},"content":{"rendered":"<p>The chart below displays the current yield curve for U.S. Treasury securities. Click on the date to select and display past yield curves. A case study of the Great Recession of 2007-09 follows.<\/p>\n<p><iframe loading=\"lazy\" src=\"https:\/\/hobbes.colby.edu\/Manny\/Inverted_yield\/\" width=\"800,\" height=\"600,\" frameborder=\"0\"><\/iframe><\/p>\n<p style=\"text-align: center;\"><strong>Case Study: The Great Recession of 2007-09<\/strong><\/p>\n<p>The NBER&#8217;s Business Cycle Dating Committee estimates that December 2007 coincided with a peak in the overall level of economic activity and the subsequent downturn lasted 18 months &#8211; the longest recession since the Great Depression.<\/p>\n<p>Using the interactive app above, let&#8217;s look at the U.S. Treasury Yield Curve for November 1, 2005 (enter 2005-11-1) &#8211; two years before the start of the Great Recession. The yield curve looks relatively <em>normal<\/em> with an positive slope across the range of available maturities.<\/p>\n<p>Using the calendar by pointing and clicking on different dates to move forward through time you&#8217;ll find that by the end of 2005 (2005-12-30) the yield curve has <em>inverted<\/em>, with the yield on 10-year Treasury notes falling below the yield on 2-year Treasury securities.<\/p>\n<p>The conventional wisdom at the time was that investors needn&#8217;t worry about the inversion because a global savings glut was thought to be bidding up prices and depressing long-term bond yields. However, the Yield Curve remained inverted well into 2007.<\/p>\n<p>By the end of January 2008 &#8211; one month into the Great Recession &#8211; the Yield Curve had returned to its normal shape. Yet economic activity continued to decline and the recession persisted until June 2009.<\/p>\n<p>The takeaway from this exercise is that the Yield Curve can provide a signal of an impending recession, but does not offer precise information in terms of its timing, length or severity.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The chart below displays the current yield curve for U.S. Treasury securities. Click on the date to select and display past yield curves. A case study of the Great Recession of 2007-09 follows. Case Study: The Great Recession of 2007-09 The NBER&#8217;s Business Cycle Dating Committee estimates that December 2007 coincided with a peak in &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/web.colby.edu\/cl4es\/recession-monitor\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Yield Curve&#8221;<\/span><\/a><\/p>\n","protected":false},"author":132,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"ngg_post_thumbnail":0,"footnotes":""},"_links":{"self":[{"href":"https:\/\/web.colby.edu\/cl4es\/wp-json\/wp\/v2\/pages\/38"}],"collection":[{"href":"https:\/\/web.colby.edu\/cl4es\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/web.colby.edu\/cl4es\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/web.colby.edu\/cl4es\/wp-json\/wp\/v2\/users\/132"}],"replies":[{"embeddable":true,"href":"https:\/\/web.colby.edu\/cl4es\/wp-json\/wp\/v2\/comments?post=38"}],"version-history":[{"count":10,"href":"https:\/\/web.colby.edu\/cl4es\/wp-json\/wp\/v2\/pages\/38\/revisions"}],"predecessor-version":[{"id":202,"href":"https:\/\/web.colby.edu\/cl4es\/wp-json\/wp\/v2\/pages\/38\/revisions\/202"}],"wp:attachment":[{"href":"https:\/\/web.colby.edu\/cl4es\/wp-json\/wp\/v2\/media?parent=38"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}