John Pattullo, Co-Fund Manager for Henderson Diversified Income Trust, explains that the inverted yield curve is reliable indicator of recession and why he believes we are still very much in the global financial crisis. John also explains how the current economic environment favours bond investing and why investors should seek growth bonds for a secure income stream.
Inverted yield curve: an interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality. This type of yield curve is the rarest of the three main curve types and is considered to be a predictor of economic recession
Fiscal policy: the use of government spending and tax policies to influence economic conditions, including demand for goods and services, employment, inflation, and economic growth
Cyclical stock: an equity security whose price is affected by macroeconomic, systematic changes in the overall economy.