inverted yield curve

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Related to Inverted Yield Curves: Flat Yield Curve, Normal Yield Curve

Inverted yield curve

When short-term interest rates are higher than long-term rates. Antithesis of positive yield curve.

Inverted Yield Curve

A yield curve in which the long-term yields on bonds are lower than short-term yields. A normal yield curve trends upward because bondholders expect a larger interest rate for a longer investment; however, if a yield curve turns negative, it indicates that the market believes that demand for long-term debt securities is increasing or will increase, which will drive yields downward. Higher demand for bonds usually occurs when investors believe that stock prices will fall. As a result, an inverted yield curve is a highly bearish indicator and indeed is seen as a predictor of a coming recession. An inverted yield curve is the rarest yield curve. It is also called a negative yield curve.

inverted yield curve

References in periodicals archive ?
That's why an inverted yield curve has come to be a pretty reliable indicator of an imminent end to a cyclical expansion.
Since that point in time, the yield on 10-year Treasury notes has fallen nearly 70 basis points, resulting in the strongly inverted yield curve we observe today.
Inverted yield curves are generally very bad news for the economy, particularly if they resist for an extended period.
We have experienced a real estate crash in the first half of the 90s, two recessions, periods of rapidly rising interest rates (1994 and 1999), inverted yield curves (1998 and 2000), and a difficult credit quality environment (2000-2002).