The attached article from Forbes, Junk in the Trunk: The Story of Todays Bond Market was posted in June of 2019. At that time, the yield curve showed inversion for 6 month through 3 year maturities, with normal (upward movement for later maturities). In contrast, the current yield curve shows a modest, but steady, increase in yields based on bond maturity.
Keeping the quote from Reuters (below) in mind, discuss your thoughts on bond investing. How might you think about investing in bonds at this time (for consistency, lets assume you have 30-40 years until you plan to retire). In contrast, what would you recommend to your parents or grandparents, who are closer to their retirement? What I am looking for here is a discussion of what types of bonds (think about the ratings as discussed in the Junk in the Trunk article) you might consider for yourself and if you recommend the same strategy, or something different to your parents/grandparents. What are the factors or conditions/expected conditions that are driving your bond investing strategies?
Yield curve inversion is a classic signal of a looming recession. The U.S. curve has inverted before each recession in the past 50 years. It offered a false signal just once in that time. When short-term yields climb above longer-dated ones, it signals short-term borrowing costs are more expensive than longer-term loan costs.
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