GOVERNMENT BONDS YIELD. INVERTED CURVE

What are GOVERNMENT BONDS YIELD?


Bonds are Fixed Income instruments that allow investors to anticipate the flow of funds they will receive.

What does an inverted yield curve mean?

Put simply, this means that short-term US debt is more profitable than long-term debt. Economic theory says that in a “normal” situation, long-term lending should be more profitable than short-term lending.

An inverted yield curve occurs when the yield on short-term bonds (US03MY, US06MY, US01Y) is greater than the yield on longer-term bonds (US30Y, US20Y).


This is bad for the economy and worse if it is the United States because it means that they are relying on the economy in the short term since the "normal" thing is that long-term bonds give better yields.


Some economists and analysts see in this situation an indicator that a next economic crisis is coming, either in the form of a slowdown in GDP or even a recession.