1. A flat yield curve often predicts an upcoming recession.
2. A normal yield curve suggests stable economic growth.
3. The spread between 7-year and 2-year Treasury rates is used to predict future economic conditions.
4. A flat yield curve is a strong indicator of rapid economic growth.
5. A steep upward yield curve indicates that investors expect higher inflation and growth in the future.
6. The expectations theory explains that the 1-year rate next year can be estimated using the 2-year and 1-year current rates.
7. The yield curve inversion is usually a short-term market fluctuation and not a reliable indicator of economic slowdown.
8. If the current 2-year rate is 4.1% and the current 1-year rate is 4.3%, the expected 1-year rate next year is 3.9% based on the expectations theory.
9. A yield curve inversion happens when short-term rates are lower than long-term rates.
10. Investors use the yield curve to assess the likelihood of future interest rate hikes by the central bank.
11. A normal yield curve shows that long-term interest rates are higher than short-term interest rates.
12. An inverted yield curve has historically been a good predictor of economic recessions.
13. The spread between the 10-year and 2-year rates has been a key indicator in predicting future economic recessions.
14. A flat yield curve means there is little difference between short-term and long-term interest rates.
15. A steep yield curve reflects weak economic expectations in the future.
16. The expectations theory states that long-term interest rates are an average of current and future short-term rates.
17. If the 10-year rate is lower than the 2-year rate, this is an example of a normal yield curve.
18. A normal yield curve suggests that investors expect stable or improving economic conditions in the future.
19. The spread between long-term and short-term rates does not affect the profitability of banks and other lenders.
20. According to the expectations theory, if the 1-year rate is 4.3% and the 2-year rate is 4.1%, the expected 1-year rate next year would be 3.9%.