Part 5/12:
For example, comparing the current rate increase to past episodes reveals that the real shock is more severe now. While in the 1980s, the jump from 10% to 20% was significant, the economic context then was different; back then, the market had more time to adjust, and inflation expectations were higher. Today, the inversion of the yield curve—long-term yields dipping below short-term yields—is at an extreme, with a 100 basis point inversion against a backdrop of 4% treasury yields—a level suggesting a high likelihood of recession.