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How bad can it get for the S&P 500?

There’s a lot of concern that the U.S. economy experienced an “inverted yield curve” on Friday. That’s when the interest rate on short-term Treasurys, such as 3-month bills TMUBMUSD03M, -0.12% or 2-year notes TMUBMUSD02Y, +1.44% is higher than on longer-term debt, such as 10-year notes TMUBMUSD10Y, +0.80% or 30-year bonds TMUBMUSD30Y, +0.31%

It’s rare for short-term instruments to pay more than long-term ones. Bond buyers usually expect a higher yield when tying up their capital for longer periods. But so many people have been buying up 10-year Treasurys—fearing an economic slowdown—that it drove the yield below that of 3-month T-bills.

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