In addition to sending a guiding signal to the economic outlook, the shape of the US bond yield curve will also have an impact on consumers and enterprises. When short-term interest rates rise, domestic banks in the United States tend to raise the benchmark interest rates of a series of consumer and commercial loans, including small business loans and credit card interest, which leads to the pressure on consumers' borrowing costs, and mortgage interest rates tend to rise.
This means that when the yield curve is steep, banks can borrow money at a lower interest rate and lend at a higher interest rate. On the contrary, when the curve flattens, they will find that profits are squeezed, which may hinder lending.
At present, it is inconclusive whether the Fed's austerity policy will seriously weaken economic growth and hit the stock market. However, if the yield curve of US bonds searched by lead bond really appears upside down in the near future, then the global economy and financial markets will undoubtedly need to sound an alarm.