The U.S. yield curve is its most inverted in more than 40 years, indicating investors are raising their bets of a coming recession, the Financial Times reports. [Bond market points to Fed standing firm in battle against inflation- FT]
The inversion — when shorter-term borrowing costs are higher than longer-term ones — has been a reliable predictor of recessions for a half-century. Debt markets elsewhere suggest bleak times ahead, too. Dollar-denominated debt in 15 of 72 emerging markets tracked by Bloomberg is trading at distressed levels, and while some $215 billion of debt in developing countries will need to be refinanced in the next two years, many poorer countries can no longer borrow
