The Confusing Curve
Business Daily
BBC
4.4 • 816 Ratings
🗓️ 16 October 2018
⏱️ 18 minutes
🧾️ Download transcript
Summary
When governments need to raise money, they promise a reward in return for your investment. But how much - or how little - they're promising says a lot about the country, and if investors perceive it as risky to invest in or not. But why are analysts so obsessed over something called the bond yield curve? Pippa Malmgren, policy analyst, says at the moment there's nothing to be afraid of from what the curve tells us. Russ Mould from AJ Bell on the other hand says we should be careful. We try to make sense of this confusing curve.
(Image: A man stares at a confusing illustration of graphs on a blackboard. Credit: francescoch/ Getty Creative)
Transcript
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| 0:00.0 | Hello, I'm Ed Butler. Welcome to Business Daily from the BBC. Coming up, why a left field market |
| 0:07.7 | indicator could be a harbinger of doom. If you do believe in the signal coming from the yield |
| 0:13.2 | curve right now, what you're really thinking is that this is as good as it gets. And a world |
| 0:18.5 | that's got more debt now than ever is going to feel some pain in the |
| 0:22.1 | future. That's what you're frightened of. Yep, today's show is all about gazing at the economic |
| 0:26.8 | omens and whether we should be starting to get scared or maybe not. This is my problem as everyone |
| 0:33.3 | is forecasting crash, except me. So I think we are actually at the beginning of a period of remarkable growth, |
| 0:40.3 | probably the most interesting period of innovation since the Industrial Revolution. |
| 0:44.9 | Reading the tea leaves, Business Daily from the BBC. |
| 0:51.1 | So you may or you may not have noticed this. |
| 0:53.7 | In fact, you probably haven't, but there is some anxiety on the bond markets these days about a certain curve, a curve on a graph that's threatening to bend the wrong way. |
| 1:03.5 | Well, that US yield curve just keeps getting flatter. We're now at level's not seen in about a decade. |
| 1:09.1 | Inverting the yield curve, isn't such a huge worry |
| 1:10.9 | because it's probably a reflection |
| 1:12.1 | of inflation expectations. |
| 1:14.1 | Let me briefly mention the yield curve. |
| 1:15.7 | I mean, it's yield curve something |
| 1:17.0 | that people are talking about a lot. |
| 1:18.6 | How do we know where it is |
| 1:19.6 | and what are the consequences |
| 1:20.5 | of being above or below it? |
| 1:21.6 | That's really what when people are talking about |
... |
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