Goldman Sachs says the yield curve isn't signalling a recession this time, but a restrictive Fed policy

• Goldman Sachs said a key recession indicator isn't signalling a downturn this time. 
• An inverted yield typically tells investors economic weakness is impending. 
• But according to the Wall Street bank, a restrictive Federal Reserve policy is what's driving the inversion. 

A key recession indicator isn't signalling a downturn this time, according to Goldman Sachs. 

The inversion of the yield curve – when short-dated Treasurys offer a higher return than longer-term Treasurys – is typically seen by investors as a sign of looming economic weakness. 

That's because banks, which make money by borrowing bonds at typically low short-term rates and lend them out to businesses at higher long-term rates, have little motive to lend when short-term rates are so high.