36. Refresher: We are Paying Attention to Bonds Again
Description
The bond market has always been relevant, but it hasn't mattered as much since the Great Financial Crisis (GFC) - that's when the housing market collapsed in 2008. When we have a financial crisis, there is a fiscal policy response and monetary policy response to stimulate the economy. Right now we are in restrictive fed territory, they have raised rates to levels not seen since the GFC. Now the big market question is: when will they lower rates? If they do it too soon, it will reignite inflation, too late, it will tip us into a recession. The Fed's action affect the front end of the curve... when they lower and raise rates. WHICH AFFECTS YOU. (and that HYSA). You need to understand the yield curve and what de-inversion would mean.
Is The Fed going to tip us into a recession? What does that even mean? We've been seeing your questions around this and more after our recent episodes on the FOMC meetings.
Let's revisit how the yield curve works so we can all understand how the stock market and bond market is affected by The Fed's actions and what an inverted yield curve means for your money.
*This episode was recorded back in November 2023, so some things mentioned are related to that month, but overall still relevant to what's happening now.*
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