Yield curve inversion happens when short-rates rise above longer ones. Inversion happened in the U.S. in March of this year and has broadly continued since. This is a bad sign. The Federal Reserve (Fed) has expressed some concern about an inverted yield curve. For one thing, it can discourage banks from longer term lending, and projects that need long-term finance can boost growth. There are other reasons to worry too. Fortunately, the Fed has an important weapon in its toolkit, it can control the short-end of the yield curve with reasonable accuracy. So can the Fed simply end inversion by cutting rates? In theory, ... (full story)