Market MakeHer Podcast 98. Reading The Yield Curve Like a Crystal Ball for the Economy
Jul 18, 2025
Dive into the world of the yield curve and discover its secrets! Learn how inflation expectations influence yields and why different shapes of the curve signal economic shifts. The hosts break down the Fed's role in shaping short-term rates and explore how global events, from geopolitical drama to economic growth, impact bond prices. Unravel the intricate relationship between supply and demand for treasuries and understand what drives market sentiments. A must-listen for anyone curious about the forces shaping our economy!
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Yield Curve As A Market Crystal Ball
- The yield curve plots Treasury yields by maturity and reveals market expectations about growth and inflation.
- Its shape (normal, flat, inverted) acts like a crystal ball for the economy according to Jess Inskip.
Inflation Expectations Drive Yields
- Inflation expectations are a primary driver of Treasury yields because inflation erodes real returns.
- When investors expect higher inflation they sell bonds, pushing prices down and yields up, as Jess Inskip explains.
2021–22 Sell-Off Example
- Jess Inskip uses the 2021–2022 period to show inflation-led bond sell-offs that pushed the 10-year yield from under 1% to ~3%.
- That episode steepened the curve and pulled money into stocks from Treasuries, she explains.