Yield curve movements reveal economic activity and inflation expectations inaccurately.
The behavior of interest rates changes during different economic periods. By looking at the difference between inflation-indexed bonds and nominal bonds, we can predict expected inflation, but it might not always be accurate. Movements in the nominal yield spread can help predict future economic activity, but they don't always tell us if shocks are real or nominal. To understand the source of a shock, we need to look at both the spread and shifts in the yield curve together.