Trade tensions, an arrest in Canada of the CFO of a major Chinese telecom firm (requested by the US), Brexit jitters, and a minor inversion of the yield curve created a volatile atmosphere last week.
While economic fundamentals are the medium and longer-term drives of equities, short-term events can influence shares. We’ve seen it before, and we’ll see it again.
Yield curve – what is it, why it’s important
The yield curve simply measures the yield of a particular class of bonds at various maturities.
Normally, yields are higher for longer-term bonds than shorter-term bonds. Think of it like this – if you are willing to lend someone money over a longer period, you’d expect to get a higher rate.