Definition
When short-term Treasury yields are higher than long-term ones.
The story
It's upside down from normal: investors are paid more to lend for a few months than for ten years. That usually happens when they expect the Fed to cut rates later, often because they see the economy weakening. It has a strong record as a recession warning, though not a perfect one.
Why markets watch it
It's one of the most-watched recession signals.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms