“You may have heard that the Dollar Index has risen above 105.” Or perhaps: “The U.S. dollar is strengthening.” These are common phrases in financial news. But when you look at the U.S. Dollar Index (DXY) yourself, some questions naturally come up. If DXY is 100, is the dollar strong? What does 105 mean? What … Read more
When you read economic news, you often see phrases such as “leading economic indicators are weakening” or “leading indicators are pointing to a slowdown.” But what exactly are leading economic indicators? Where can you find them, and how should you interpret them when they move? Leading economic indicators are not numbers that can predict the … Read more
GDP is one of the most widely used indicators of a country’s economic size. However, GDP alone cannot explain every aspect of an economy. GDP measures the value of production that takes place within a country’s borders, but that is different from asking who ultimately receives the income generated by that production. In addition, countries … Read more
If you follow economic news, you have probably heard the term GDP many times. “GDP growth slowed.” “GDP declined, raising concerns about the economy.” “GDP per capita increased.” But what exactly does GDP measure, and why is it so important when people talk about the economy? GDP is one of the most widely used economic … Read more
When you read economic news, you often see phrases such as “recession risk,” “recession fears,” or “the economy is entering a recession.” But what exactly is a recession? Does a recession mean that the economy has stopped growing completely? Does two consecutive quarters of declining GDP automatically mean a recession? And what happens to employment, … Read more
When you look at bond yields, you may notice that bonds with similar maturities can still offer very different interest rates. For example, suppose the 10-year U.S. Treasury yield is 4% while a 10-year corporate bond yields 5%. The difference is 1 percentage point. Why would investors demand a higher yield from one bond than … Read more
When we talk about interest rates, we often say things like “the interest rate is 5%.” But a high interest rate does not necessarily mean that your money is gaining that much value. The reason is inflation. For example, suppose a bank offers a 4% annual interest rate on a deposit, while prices rise by … Read more
When you read financial news, you may come across headlines like: “The U.S. Treasury yield curve is inverted.”“The 2-year/10-year yield spread has widened.”“The 10-year Treasury yield has risen above 5%.” For someone new to economics or investing, these terms can be confusing. What exactly is a yield curve? Why do investors pay so much attention … Read more
When you read financial news, you will often see headlines like: “The Federal Reserve raised interest rates by 0.25 percentage points.” “The Fed kept interest rates unchanged.” “U.S. interest rates remain high.” But what exactly is the U.S. interest rate that people are talking about? Why does Google show something like: 4.00%–4.25% instead of one … Read more
Economic news often says things like: “The U.S. 10-year Treasury yield is approaching 5%.” “Rising Treasury yields are putting pressure on stocks.” “Higher long-term rates are increasing borrowing costs for households and businesses.” But if you are new to economics, you may wonder: “Why does the interest rate on U.S. government debt affect my stocks?” … Read more