inverted yield curve(redirected from Inverted Yield Curves)
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Related to Inverted Yield Curves: Flat Yield Curve, Normal Yield Curve
Inverted 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
See negative yield curve.