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What is an inverted yield curve, explained

Updated : March 25, 2019 07:40 AM IST

US Treasuries are bonds, or debt, sold by the federal government, most of which pay a fixed rate of interest over a fixed period, ranging from one month to 30 years.
In normal circumstances, it has an arcing, upward slope because bond investors expect to be compensated more for taking on the added risk of owning bonds with longer maturities. So a 30-year bond typically yields more than a 1-month bill or 3-year note.
On rare occasions, some or all of the yield curve ceases to be upward sloping. This occurs when shorter-dated yields are higher than longer-dated ones and is called an "inversion."
What is an inverted yield curve, explained

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