An inverted yield curve is a yield-curve configuration in which longer-maturity Treasury yields are below shorter-maturity yields. Yield-curve inversion describes the ordering or slope of yields across maturities; it is not, by itself, a universal guarantee of a recession or a substitute for specifying which maturities and curve are being compared.
ReviewedEvidence1 sourceSectionPhrases & Idioms
Quick answer
An inverted yield curve is a yield-curve configuration in which longer-maturity Treasury yields are below shorter-maturity yields.
Key details
Canonical Formyield curve inversion
Core MeaningAn inverted yield curve is a yield-curve configuration in which longer-maturity Treasury yields are below shorter-maturity yields.
Further guidance
History Boundary
Current authoritative financial meaning is published without claiming an exact inventor, coinage date, or absolute first use.
Meaning
An inverted yield curve is a yield-curve configuration in which longer-maturity Treasury yields are below shorter-maturity yields.
Usage Boundary
Yield-curve inversion describes the ordering or slope of yields across maturities; it is not, by itself, a universal guarantee of a recession or a substitute for specifying which maturities and curve are being compared.
Sources and evidence
Sources are shown with the role they play in this guide. Historical or style-sensitive claims are kept within the evidence boundary described above.
A yield curve, or term structure, describes the relationship between debt securities’ remaining time to maturity and their yields. A yield curve describes yields across maturities; it is broader than a single two-maturity spread and should not be reduced to one term-spread number.
Yield-curve flattening is a change in the curve’s slope that narrows differences between longer- and shorter-maturity yields. Flattening describes a reduction in slope and is not identical to inversion; a curve can flatten while longer-maturity yields remain above shorter-maturity yields.
Yield-curve steepening is a change in the curve’s slope that makes differences between longer- and shorter-maturity yields more pronounced. Steepening describes a change in slope, not a universal direction for every yield; short and long rates can move in different ways while the curve steepens.
Actionable Indication of Interest is a current federal securities-regulation defined term. This guide preserves the rule-specific definition and boundaries instead of replacing it with informal market shorthand.
Administrative Data is a current Regulation NMS defined term for specified administrative, control, and technical messages in the market-data plan framework.
Affiliate of a Subscriber is a current Regulation ATS defined term. This guide preserves the rule-specific meaning and boundary instead of replacing it with informal market shorthand.
Under current U.S. Regulation NMS definitions, aggregate quotation size is the sum of the quotation sizes of all responsible brokers or dealers communicating bids or offers in an NMS security at the same price. Treat this as a U.S. securities-regulation definition; it should not be generalized to unrelated uses of aggregate size or quotation outside Regulation NMS.
Alternative Trading System is a current federal securities-regulation defined term. This guide preserves the rule-specific definition and boundaries instead of replacing it with informal market shorthand.
