Short-term yield rises as interest rates rise. Spread narrows.
2. Slow growth
Central bank raises interest rates faster and short-term yield exceeds long-term yield. Spread turns negative.
High interest rates lead to more defaults. Inflation caps consumption. Central bank lowers interest rate to stimulate the economy and short-term yield falls. Spread widens.
Central bank continues easing. Spread remains wide and yield curve remains steep.
0 = Recession Risk
2.6 = Recovery Plan
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