Yield Curve Inversion
Definition
A situation in which shorter-term debt yields exceed longer-term yields for comparable borrowers. It can reflect expectations of lower future rates and has sometimes preceded economic downturns.
Canada
What does an inverted Canadian yield curve signal?
A curve is inverted over a segment when shorter yields exceed longer yields. If Canada’s two-year yield is 4% and its ten-year yield is 3%, that segment is inverted. It can reflect expectations of future rate cuts, alongside changes in how investors price long-term risk.
Bank of Canada bond yieldsUnited States
What does it mean when two-year Treasury yields exceed ten-year yields?
The two-to-ten-year segment is inverted. If the two-year yield is 4.5% and the ten-year yield is 4%, the ten-minus-two spread is minus 50 basis points. Investors may expect lower future short-term rates, and long-term risk premiums also matter.
U.S. Treasury interest rate statistics