inverted yield curve


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Related to inverted yield curve: Normal Yield Curve, Flat 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 ?
This inverted yield curve has historically been a foreteller of upcoming recession.
President Donald Trump referencing the "CRAZY INVERTED YIELD CURVE!", the term made its way onto news websites and radio and television reports that rarely delve into financial topics.
Inverted yield curves have traditionally signified that recessions would follow within 12 to 18 months.
An inverted yield curve - where short term Government bonds become less attractive than long term ones - in the UK and US has particularly spooked markets.
The inverted yield curve refers to short-term bond rates being higher than long-term ones, which is taken as a sign of investor concern about the economy.
Analysts at Arif Habib Limited predicted that an important indicator for market would be the Pakistan Investment Bond auction, where an inverted yield curve is anticipated to lure investors back to equities in the medium term.
Another important indicator for market would be PIB auction, where an inverted yield curve is anticipated to lure investors back to equities in the medium term.
Historically, an inverted yield curve has been one of the most accurate recession predictors.
He said an inverted yield curve signals that market participants expect rates to be lower in the future than they are today.
An inverted yield curve implies that current interest rates are too high for the economy which is now pricing in a high probability of a quarter-point cut by the Federal Reserve later this year.
As a general rule of thumb, an inverted yield curve -- when the yields on long-term bonds are lower than those on short-term bonds -- is considered a strong predictor of a recession.
December saw a stock market edging into bear territory, a bond market teasing the inverted yield curve typically presaging a recession, and a Federal Reserve Bank raising interest rates, which slows down lending.