What does an inverted yield curve mean?
An inverted yield curve is a term used in the media quite frequently. In this article we discuss what a yield curve represents and why an inverted yield curve does not necessarily mean a recession is on the horizon. Definition of yield curve The yield curve is a line that plots interest rates at different maturity dates. A normal yield curve should reflect longer term bonds having an interest rate which is higher than shorter bonds. This is because long-term …