This Is WORSE Than the 1929 and 2008 Yield Curve Inversions

This Is WORSE Than the 1929 and 2008 Yield Curve Inversions
The term yield curve refers to the relationship between the short- and long-term interest rates of fixed-income securities issued by the U.S. Treasury. An inverted yield curve occurs when short-term interest rates exceed long-term rates. Under normal circumstances, the yield curve is not inverted since debt with longer maturities typically carry higher interest rates than nearer-term ones.

From an economic perspective, an inverted yield curve is a noteworthy and uncommon event because it suggests that the near-term is riskier than the long term. Below, we explain this rare phenomenon, discuss its impact on consumers and investors, and tell you how to adjust your portfolio to account for it.

KEY TAKEAWAYS
A yield curve illustrates the interest rates on bonds of increasing maturities.
An inverted yield curve occurs when short-term debt instruments carry higher yields than long-term instruments of the same credit risk profile.
Inverted yield curves are unusual since longer-term debt should carry greater risk and higher interest rates, so when they occur there are implications for consumers and investors alike.
An inverted Treasury yield curve is one of the most reliable leading indicators of an impending recession.
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