Inverted Yield Curve Definition

An inverted yield curve occurs when short-term bond yields are higher than long-term bond yields.

What is an Inverted Yield Curve?

This is unusual, as longer-term bonds typically carry higher yields to compensate for greater time-related risk.

An inverted yield curve has historically been viewed by some analysts as a potential signal of future economic slowdown.

A 2-year government bond yielding more than a 10-year bond of the same issuer reflects an inverted yield curve.

An illiquid market is one where assets cannot be easily bought or sold without significantly affecting the price.

Implied volatility is the market's expectation of future price fluctuations, derived from options pricing.

An index is a statistical measure representing the performance of a group of assets, such as stocks, used to track a market or sector.