Yield Curve
What is Yield Curve?
A chart of interest rates on bonds of the same credit quality across different maturities.
Understanding Yield Curve
Normally, longer-term bonds pay higher yields than short-term ones, so the curve slopes upward. When short-term yields rise above long-term yields, the curve is said to be inverted.
An inverted U.S. Treasury yield curve has preceded many recessions, because it often reflects expectations that interest rates will be cut in the future. It is a warning sign, not a precise timer.