| A situation where the yields on short-term instruments are higher than those on term/">long-term securities. This is a reversal of the traditional pattern, the normal yield curve, where term/">long-term rates are higher to reflect the risk of holding securities for a longer time. The inversion often arises due to a glut of short-dated paper or a shortage, or feared shortage, of longer term paper. It could also reflect expectations that inflation will be lower in the future. Also called a negative yield curve.
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