In recent weeks, the yield curve (particularly the long end) has shifted upward. Good news for the economy is often deemed bad news for long-term bonds, since robust growth leads bond prices to fall and interest rates to rise. Do long-term interest rates show such a cyclical pattern? A look at the relation between 10 and 30 year bonds and recessions since 1977 indicates that interest rates rose prior to each recession and then fell during each downturn.
Suggested citation: “Interest Rates,” Federal Reserve Bank of Cleveland, Economic Trends, no. 96-04, pp. 05, 04.01.1996.