Inverted Yield Curve

There are several explanations for why investors are several willing to settle for returns of this kind.Anticipation of lower interest rates in future so desire to “lock-in” returns would be one explanation.Pessimism about future economic prospects or desire to hedge against uncertainty are other explanations often given.To deal with this there is sometimes a willingness to accept lower yield on what are seen to be quality low risk debt instruments.Also a belief that rates will fall and therefore enable speculative capital gains on instruments.Lack of quality alternative investments is other possibility or some combination of above factors.