Inverted yield curve
A yield curve shows the relationship between the yield on securities and their maturities (how long it is until they can be redeemed at their face value).
A yield curve shows the relationship between the yield on securities and their maturities (how long it is until they can be redeemed at their face value).
Generally, in developed countries, the curve of the yield plotted against maturity will slope gently upwards, reflecting the fact that investors expect to be paid more interest for locking in their investments for a longer period than a shorter one. The higher the rate they expect, the steeper the curve will be.
The shape of a yield curve is, to a degree, seen as a predictor of the future. A downward sloping (or 'inverted') yield curve suggests that investors expect long-term interest rates to fall, and is often taken as a sign that an economic downturn is on the way.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
See Tim Bennett's video tutorial: Beginner's guide to investing: the yield curve.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
8 of the best houses for sale with tennis courts
The best houses for sale with tennis courts – from a period property in Dumfries and Galloway with two islands on the River Dee, to a house in Cumbria with a 1977 En Tout Cas tennis court
-
Review: Eden Roc Cap Cana – fun, sun and golf in the Caribbean
Travel Eden Roc Cap Cana in the Dominican Republic offers everything from relaxing by the pool to a world-class golf course