What is an inverted yield curve? In short, when short term treasuries(2-years) gives higher yield than long term treasuries (10-years) This is unusual because longer term treasuries should carry higher risk become of the long time-line and therefore should give higher yields to compensate such risk taken by investors. Therefore when an inverted yield occurs there are implications which I will explain. What always follow after the yield curve inverted? Recession Historically, an inverted yield curve tells us there is a pending recession coming. Short term treasuries giving higher yield shows that investors are not optimistic about the outlook short term and are pouring into long term treasuries thus causing long term yield to fall. Since 1970 every yield curve that in
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