ANALYSIS: Monetary tightening to fight inflation as fears emerge of slowing growth makes for a lot of drama on bond markets.
| The Federal Reserve’s decision to raise interest rates for the first time in three years this week has markets worried that short-term borrowing costs are about to become more expensive than their long-term counterparts – a classic yield curve inversion.
The commodity price increase since the outbreak of the war in Ukraine represents a fresh shock that will likely slow the pace of economic growth just as rates are rising. Tighter lending usually means less economic activity and lower asset prices. That means lower GDP and lower share prices.that every yield curve inversion over the last 40 years has only happened after the Fed started lifting rates.
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