What does it mean when the yield curve is inverted?
What does it mean when the yield curve is inverted?
An inverted yield curve means that a short-term U.S. treasury is paying a higher interest rate than long-term U.S. treasuries. The inverted yield curve was first coined as a recession indicator by financial economist Campbell Harvey of Duke University in 1986.
What is true about an inverted yield curve?
An inverted yield curve reflects a scenario in which short-term debt instruments have higher yields than long-term instruments of the same credit risk profile. Typically, long-term bonds have higher yields than short-term bonds, and the yield curve slopes upward to the right.