What is an 'Inverted Yield Curve'
An inverted yield curve is an interest rate environment in which longterm debt instruments have a lower yield than shortterm debt instruments of the same credit quality. This type of yield curve is the rarest of the three main curve types and is considered to be a predictor of economic recession.
Partial inversion occurs when only some of the shortterm Treasuries (five or 10 years) have higher yields than the 30year Treasuries do. An inverted yield curve is sometimes referred to as a "negative yield curve".
BREAKING DOWN 'Inverted Yield Curve'
Historically, inversions of the yield curve have preceded many of the U.S. recessions. Due to this historical correlation, the yield curve is often seen as an accurate forecast of the turning points of the business cycle. A recent example is when the U.S. Treasury yield curve inverted in 2000 just before the U.S. equity markets collapsed. An inverse yield curve predicts lower interest rates in the future as longerterm bonds are being demanded, sending the yields down.

Normal Yield Curve
A yield curve in which shortterm debt instruments have a lower ... 
Yield Curve
A line that plots the interest rates, at a set point in time, ... 
Term Structure Of Interest Rates
The relationship between interest rates or bond yields and different ... 
Flat Yield Curve
A yield curve in which there is little difference between shortterm ... 
Yield Elbow
The point on the yield curve indicating the year in which the ... 
Humped Yield Curve
A relatively rare type of yield curve that results when the interest ...

Markets
Will an Inverted Yield Curve Happen Again?
Explore the causes of inverted yield curves, their frequency, their accuracy in forecasting recessions and whether this type of event can happen again. 
Investing
The Impact Of An Inverted Yield Curve
Find out what happens when shortterm interest rates exceed longterm rates. 
Investing
Understanding the Inverted Yield Curve
An inverted yield curve occurs during the rare times when shortterm interest rates are higher than longterm interest rates. 
Markets
U.S. Recession Without a Yield Curve Warning?
The inverted yield curve has correctly predicted past recessions in the U.S. economy. However, that prediction model may fail in the current scenario. 
Investing
Trade Bond ETFs Using Yield Curves
Different types of yield curves provide important insights for trading bondbased securities. 
Markets
Understanding Term Structure of Interest Rates
The term structure of interest rates is a common method of valuing bonds. 
Investing
Yield Curve
Learn more about how this curve is used to predict changes in economic output and growth. 
Managing Wealth
How Bond Market Pricing Works
Learn the basic rules that govern how bond prices are determined. 
Markets
Understanding Interest Rates Inflation And The Bond Market
Interest rates, bond yields and inflation expectations are all correlated. 
Markets
What is a Bell Curve?
The bell curve is the most common type of graphed data distribution.

What does the yield curve actually predict?
Find out what an inverted yield curve represents, how it has performed as a leading indicator and why it appears to hold ... Read Answer >> 
How can the yield curve help me make investment decisions?
Learn about the yield curve, and discover why this chart is an important economic indicator. How do Treasury bond yields ... Read Answer >> 
Why are the term structure of interest rates indicative of future interest rates?
Learn why economists believe the term structure for interest rates reflects investor expectations for future interest rates ... Read Answer >> 
What is the difference between term structure and a yield curve?
Understand the difference between the term structure of interest rates and a yield curve, if any. Learn what the yield curve ... Read Answer >> 
Below is an example of US Treasury yields for various maturities ...
The correct answer is b. A normal yield curve chart shows longterm debt instruments having higher yields than shortterm ... Read Answer >> 
What is the current yield curve and why is it important?
Understand what the current yield curve represents, and learn how market analysts commonly interpret various changes in the ... Read Answer >>