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Strategies & Market Trends : Galapagos Islands
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To: Challo Jeregy who wrote (11961)11/7/2002 8:23:00 PM
From: Jorj X Mckie  Read Replies (2) of 57110
 
It means that short term rates are on par or near mid and long term interest rates. Normally, short term rates are less than long term rates.

Stockcharts.com has a neat little animated yield curve chart that shows the yield curve from 1995 to today. You can move the timeline bar on the chart over different areas and see what was happening with the stock market and the yield curve. Look at the period right before and through the 1998 crash. The yield curve flattens out there. And then if you look at Feb-April 2000, you can see the yield curve invert. This is when short term rates are actually greater than the long term rates. NotMorgan (JP) brought this to my attention back in February 2000 as a sign that the top of the mania was near. Flattening and inverting yield curves are not usually a good thing for stocks. I would need to educate myself a bit more to explain why. There are others that can probably do it off the top of their head.

stockcharts.com
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