Inversion and Steepness of the Yield CurveA normal yield curve slopes upward as the long-term treasury bonds or bonds with longer maturities typically yield higher returns due to higher risk associated with their investments. However, if investors are concerned about an economic downturn in the future, they rush to park their money in safer long-term bonds. At this point, yields start to fall and the spread between the long-term yields and the short-term yields becomes narrower. Steepness in the curve is observed during economic expansion, when the long-end is markedly higher than the short-end.
Historical 10-Year and 1-Year Treasury Rates
Inversion History (20Y - 3M Yields)