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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › inverted yield curve
the shorter term yields are higher than the longer term yield which can be a sign of upcoming recession how please explain this
It means that investors are expecting interest rates to fall in the future.
This does not necessarily mean that there will be a recession, but in a recession interest rates do tend to fall. So if people expect interest rates to fall, it could be because they expect that there will be a recession.
