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Katherine Ross: How should the average Joe understand what happened with the inverted yield curve and what it means?

Michael Reynolds: Sure. So you know, I think of the yield curve, we try to compare the yield on shorter term bonds and longer term bonds. When you see shorter term bonds yield more than longer term bonds, that is historically been a signal that a recession is coming. Now this time around we're sort of recognizing that there's perhaps some dislocations in the market on a global scale that have been messing with the signal that we've been getting there. That is probably not giving the traditional signal recession that it has in the past. I think part of that is global demand with negative yields across the globe at this point with a German yield curve all the way out to 30 years, you're getting negative rates. You're basically paying for the privilege to lend the German government money at this point. Investors need yields and when they're looking for yields, the US is the only game in town. We have positive yields and we're a relatively risk-free sort of investment on the treasury perspective. That demand is bringing down the long end of the curve. On the short end, the Federal Reserve has been cutting rates. They did it for the first time last month and there are expectations that they're going to continue to do so in the future. And that short end of the curve is sort of influenced by Fed policy. So as we expect fed funds to sort of come down the rest of the year, the Fed funds futures market is pricing and a base case for two more rate cuts by the end of the year. So if we continue to see that short end come down, we might actually get to a bit more of an equilibrium in the long-term in the short term. So, you know, I think there's a lot of technical factors at this point that are driving this yield curve inversion. So I would be a little cautious in reacting to it too quickly.

Alright, folks, we've all seen the headlines...

But what does it really mean when a yield curve inverts and how should the average investor approach a yield curve inversion?

Michael Reynolds, investment strategy officer at Glenmede, sat down with TheStreet to talk about what investors need to know about the yield curve inversion and why it matters...or doesn't.

"So you know...we try to compare the yield on shorter-term bonds and longer-term bonds. When you see shorter-term bonds yield more than longer-term bonds, that is historically been a signal that a recession is coming. Now this time around we're sort of recognizing that there's perhaps some dislocations in the market on a global scale that have been messing with the signal that we've been getting there," said Reynolds. "That is probably not giving the traditional signal recession that it has in the past. I think part of that is global demand with negative yields across the globe at this point with a German yield curve all the way out to 30 years, you're getting negative rates. You're basically paying for the privilege to lend the German government money at this point. Investors need yields and when they're looking for yields, the U.S. is the only game in town."

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Editor's Note: This video has been updated to reflect Glenmede's name.