Who's Afraid of an inverted yield curve?

There seems to be a lot of fear around about the prospect of the US yield curve inverting. Hardly a day goes by without another article speculating about when the curve might invert and what might happen if it does. Given that an inverted yield curve is widely regarded as a predictor of recession, it is not difficult to understand why people are concerned – but it is also worth taking a step back from the headlines to try to understand what an inverted yield curve actually tells us, and what it doesn’t.