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Global financial markets may be in the midst of a major moment in history

ABC |  19 August 2019  |  Investing

What's that old saying about wood and trees?

For most of us, most of the time, it's not all that apparent when you're at a pivotal point in history.

Last week, however, appeared to be one of those moments when everyone was in a flap over the inverted yield curve.


Until last Thursday, it was an obscure term mentioned in hushed tones among economists and bond market traders. Then, suddenly, it was splashed across the newspapers and all over the evening news.

Every time since World War II, whenever long-term interest rates dropped below short-term rates, recession was sure to follow. That's exactly what happened on Wall Street the previous night when the 10-year US government bond rate went below the two-year rate.

Stock markets duly took fright, investors hit the ejector buttons and trillions of dollars globally were expunged from the value of listed companies.

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