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Hamptons.com
October 9, 2019

The Inverted Yield Curve – What Does It Mean to Me?

Rocco A. Carrieroby Rocco A. Carriero
in Real Estate
Home Real Estate

Investors who follow the markets have seen headlines in recent weeks about something called the “inverted yield curve.” For those less familiar with the phenomenon, an inverted yield curve is essentially a point on a chart where short-term investments in U.S. Treasury bonds pay more than long-term ones. And when it occurs, it’s generally regarded as a warning sign for the economy and markets.

What does this mean, exactly? If you are asking yourself this question, you’re not alone. So, let’s break down the inverted yield curve and the significance it could carry for you.

Understanding how bonds work

Before delving into the specifics of an inverted yield curve, it helps to understand how the bond market works. In this example of a yield curve, we’re focused on government-issued bonds referred to as U.S. Treasury securities.

Investors who purchase Treasury bonds are lending money to the government. In return, they earn interest, or a yield, on that security. In a typical economic environment, investors earn lower yields on shorter-term bonds and higher yields on longer-term bonds. This reflects an expectation that the longer the lending period, the higher the risk.

The normal shape of the yield curve

The proverbial “yield curve” is drawn by plotting out current yields on Treasury securities of various
maturities. The shortest maturities are on the left-hand side (one-month, two-month, three-month and six-
month). The scale continues plotting yields for one-year, two-year, five-year, seven-year, 10-year and 20-
year yields, ending on the far-right side of the scale with 30-year bond yields.

If we assume that investors typically require higher yields to invest in bonds with longer maturities, then
under normal circumstances the yield curve is upward sloping. For example, at the end of October 2018,
yields on Treasury securities ranged from 2.30% for one-month bonds to 3.39% for 30-year bonds, with
the curve rising steadily upward at each maturity level.

The slope changes

In recent months, we’ve seen a change in the slope of the yield curve. It has generally flattened out, with little differentiation in rates between shorter-term and longer-term Treasury securities.

Most notable to the markets was an inversion between the yields on two benchmark securities, the two-year Treasury and the 10-year Treasury. On August 27th, yields on 10-year Treasuries fell to 1.49%, lower than the 1.53% yield on two-year Treasuries. Even the one-month Treasury security paid a higher yield (2.07%) than the 30-year Treasury bond (1.97%).*

Raising investor concerns

Yields on Treasury bonds are driven primarily by demand for those bonds. When yields on longer-term securities drop low enough to result in an inverted yield curve, it indicates that many investors are seeking to buy those securities.

The conventional wisdom is that investors who choose to accept low yields for longer-term bonds anticipate that a recession may be approaching. If a recession occurs, the Federal Reserve is likely to cut the short-term interest rates it controls. Often when that occurs, yields on other types of bonds decline as well. So those investing in long-term bonds may anticipate Federal Reserve rate cuts and want to lock in higher rates on longer-term bonds before they drop.

Is it a reliable recession indicator?

There is plenty of speculation that the inverted yield curve could signal a coming recession. While a recession has often followed a yield curve inversion, such an occurrence is not set in stone. What’s more, it is not a reliable indicator of the exact timing of a recession. In fact, no such indicator related to timing of the economic cycle appears to exist.

Yet it is worthwhile to note that we are in an unusual environment for fixed income securities given the inverted or flattened shape of the yield curve. There appears to be a fair amount of uncertainty about the near-term outlook for the economy and markets. It may be an opportune time to review your current investment strategy and consider whether any changes are appropriate.

*Source: U.S. Department of the Treasury, “Daily Treasury Yield Curve Rates,” (www.treasury.gov)

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INTERVIEW: Director Ric Burns On “Oliver Sacks: His Own Life”

INTERVIEW: Director Ric Burns On "Oliver Sacks: His Own Life"

  • On Saturday, June 21st, Palm Tree Crew returned to the Hamptons for the fifth-annual Palm Tree Music Festival, the hottest summertime event on the East End. 

This year’s festival, featuring REVOLVE among its standout sponsors, brought together a legendary lineup of performers including Palm Tree Crew co-founder Kygo, Fisher, and Mau P, alongside Blond:ish, Coco + Breezy, Tinx & Lucas, Benjamin Lloyd, and Beau Cruz.

#hamptons #palmtreemusicfestival #kygo #fisher #blondish #cocoandbreezy #benjaminlloyd #beaucruz #southampton #musicfestival
  • Antiques have a fresh new home in the Hamptons as Zoe Hoare, a celebrated antiques expert and interior designer, opens her first-ever storefront at 2487 Main Street. After years of curating rare treasures for clients across Sydney, London, and beyond, Zoe brings her signature blend of old-world charm and global style to the heart of Bridgehampton.⁠
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Located in the Malia Mills annex, Hoare & Hoare Antiques, is a dream for vintage lovers and design enthusiasts alike. From 18th and 19th century European finds, to playful, affordable decor, every piece has a story. Think: blue and white enamel kitchenware from France, hand-dyed table linens in candy hues, and butter-soft Indian cashmere scarves. Zoe’s unique eye even extends to fashion, with vintage French work jackets and overalls that are right on trend.⁠
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“I’ve always had a passion for finding pieces with stories and character,” says Zoe. “Every item in my collection is something that sparks joy, whether it’s a beautifully worn French enamel pot, a vintage work jacket, or a hand-dyed tablecloth. I want my store to feel like a treasure hunt, full of unexpected finds and nostalgic charm.”⁠
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@hamptonsnystyle⁠
@hoareandhoareantiques⁠
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Read the full article at Hamptons.com (Link in Bio)⁠
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#hoareantiques #antiques #bridgehampton #zoehoare #thehamptons
  • 5 White Oak Lane, Southampton, NY 11968⁠
Saunders Exclusive: $4,995,000⁠
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@vinceinthehamptons⁠
@drewgreenhamptons⁠
@hamptonsrealestate⁠
@paramountdevelopmentgroup⁠
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Discover unparalleled luxury living in this magnificent new construction from Paramount Development Group.⁠
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This spectacular residential property boasts 7 bedrooms, 5 full baths, and 1 half bath spread across 4,929 +/- sq. ft. of meticulously designed space.⁠
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Nestled on 0.98 acres of pristine land, this newly constructed masterpiece offers a haven of elegance and comfort. ⁠
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Built in 2024, the residence spans two stories with an additional 1,438 square feet of finished lower level space.⁠
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Read the full article at Hamptons.com (Link in Bio)⁠
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#hamptons #realestate #newconstruction #luxury #southampton
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WESTHAMPTON⁠
🥑 Local Provisions – Smoothies, specialty toast, and local love⁠
🌮 Funchos – Vegan tacos & burritos with outdoor seating⁠
🍝 Baby Moon – Vegan-friendly pastas (get the eggplant!)⁠
🍷 Salt & Loft – Chic setting with salads, pasta, and a Beyond burger⁠
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EAST QUOGUE⁠
🍱 Tony’s Fusion – Top-tier tofu dishes, veggie curry, and sweet potato rolls⁠
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HAMPTON BAYS⁠
🥢 Matsulin – Asian fusion, mock meats & killer peanut sauce⁠
☕ Hampton Coffee Co. – Beyond breakfast sandwich, smoothies, & a “Happy Wrap”⁠
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SOUTHAMPTON⁠
🥪 Four Oaks – All-day vegan eats & organic juices⁠
🍛 Saaz – Authentic Indian with tons of vegan options + lunch buffet!⁠
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BRIDGEHAMPTON & WATER MILL⁠
🍣 Yama Q – Cozy sushi spot with veg rolls and tofu entrees⁠
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🇬🇷 Elaia Estiatorio – Greek small plates, spreads, and salads⁠
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SAG HARBOR⁠
🥗 Provisions – Café + health market, tons of vegan dishes⁠
🌾 Page at 63 Main – Upscale, with vegan bowls & salads⁠
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🍜 Sen – Modern Japanese with rice/noodle dishes & veg sushi⁠
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EAST HAMPTON & AMAGANSETT⁠
🥟 Hampton Chutney Co. – Indian dosas, thali, and oat chai⁠
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 MONTAUK⁠
🥙 Naturally Good Café – Smoothies, juices & vegan breakfast⁠
🍽 Joni’s Kitchen – Tofu scrambles, stir-fry, smoothies & steps from the beach!⁠
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Cover: @localprovisionswhb⁠
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View the complete guide at Hamptons.com (Link in Bio)⁠
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#hamptons #dining #vegan #weekend #montauk #westhampton
  • Sushi by Boū will offer just eight seats per table, a truly unique and memorable sushi experience inside Sydney’s “Taylor” Made Cuisine in Westhampton Beach. 

@sushibybou_westhampton 

#sushi #omakase #hamptons #dining #westhampton
  • Who’s excited for the Palm Tree Music Festival! ⁠
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Check out the Top Hamptons Events This Weekend!⁠
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🎶 5th Annual Palm Tree Music Festival⁠
📅 Saturday, June 21st | 🕑 2pm – 11pm⁠
📍 Shinnecock Indian Territory, Southampton⁠
🌴 Iconic music + luxury vibes + brand activations.⁠
📸: Rob Rich/SocietyAllure.com ©2025⁠
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🛍️ Female Founders Market at The HUB⁠
📅 Saturday, June 21st | 🕘 9am – 6pm⁠
📍 2183 Montauk Hwy, Bridgehampton⁠
✨ Shop curated female-founded Hamptons brands.⁠
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👡 Dolce Vita Pop-Up in Southampton⁠
📅 June 20–22 | 🕚 11am – 3pm daily⁠
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👜 Kulson Pop-Up at Sage & Madison⁠
📅 Friday, June 20th | 🕒 3pm – 6pm⁠
📍 31 Madison Street, Sag Harbor⁠
🥂 Sip + shop Kulson’s Summer Capsule Collection.⁠
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🍦 BuddhaBerry x Stocked Pop-Up⁠
📅 Friday, June 20th | 🕛 12pm – 5pm⁠
📍 125 Main St, Sag Harbor⁠
🍪 Salted cookie + froyo collab = YUM.⁠
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👜 Hamptons Handbag Festival⁠
📅 Sunday, June 22nd | 🕙 10am – 5pm⁠
📍 15 Montauk Hwy, East Hampton⁠
👜 From vintage to designer. All price points.⁠
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📚 Author Talk: Nellie Sciutto⁠
📅 Saturday, June 21st | 🕕 6pm – 7:30pm⁠
📍 East Hampton Library⁠
🎬 Hear Hollywood tales + get your book signed!⁠
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🎭 Colin Quinn at WHBPAC⁠
📅 Friday, June 20th | 🕗 8pm⁠
📍 76 Main St, Westhampton Beach⁠
😂 Big laughs with the comedy legend.⁠
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🎶 Ghost-Note at Talkhouse⁠
📅 Saturday, June 21st | 🕗 8pm⁠
📍 Stephen Talkhouse, Amagansett⁠
🔥 Don’t miss this epic jam session.⁠
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🥾 Penny Pond Hike⁠
📅 Sunday, June 22nd | 🕤 9:30am – 11:30am⁠
📍 Meet at Red Creek Rd, Hampton Bays⁠
🌲 A beautiful trail to start your Sunday.⁠
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Check out more events at Hamptons.com (Link in Bio)⁠
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#palmtreemusicfestival #hamptons #colinquinn #hub #dolcevita #weekend
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