“In terms of the business cycle, the yield curve is typically steep at the bottom of the cycle. As the cycle moves toward expansion, the curve tends to flatten. At the top of the cycle, the yield curve will likely be flat to inverted. During contraction, the curve will begin to re-steepen.”
I literally understand nothing from this. Could you please help me to breakdown what is meant in here?
Look at your other post I answered about the reasoning behind yield curves slopes.
To understand yield curves in relation to business cycle just learn the mechanism of interest rates and business cycles and know that yield curves are a lead predictor of economic performance. It is driven by expectations and made reality some time after.
Not 100% true but stylized facts. Just check the data and plot time series such as term spread vs. GDP (any kind of macroeconomic indicators related to real output, PMI, confidence indexes whatever) or other characteristics of yield curve (level, slope, curvature) and economic indicators over period highlighted by NBER recession using FRED API (Data Center). Yield curve positions are related to “flight to quality”, central banks operation, corporate funding conditions etc… business cycle and yield curve relationship is like story-telling.