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Inverted Yield Curve
Macro & the Fed
An inverted yield curve is when short-term yields rise above long-term ones; the most watched measures are the 10-year minus 2-year and 10-year minus 3-month spreads.
It is read as the market expecting future rate cuts, that is, an economic slowdown. Historically it has come before most US recessions, but the lag has ranged from months to years and there have been inversions that were not followed by a recession. It is a warning sign, not a timetable.
The Shape of It
A conceptual drawing; it does not show a real series.
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