The financial media is buzzing over the flattening U.S. yield curve. So what happens to the stock market in flattening yield-curve periods? Answer: Cyclical bottoms, cyclical tops, melt-ups, and crashes – i.e., just about everything.
Flattening yield curves haven’t predicted stock market performance. The inverted curves of 1989-1990, 1998-2000, and 2006-2007, however, warned that short-term interest rates were too high.