Short answer
An inverted yield curve means short-term bonds pay more than long-term bonds — historically one of the most reliable recession warnings.
Why is the yield curve inverted?
What happened
The 2-year US Treasury yield sat above the 10-year yield for an extended period.
Why it happened
It usually happens when the Fed hikes short-term rates aggressively to fight inflation, while long-term investors bet growth will slow.
Why investors care
Every US recession since 1970 was preceded by an inverted yield curve — though the lag can be 6-24 months.
How it affects ordinary people
Banks make less on loans (they borrow short and lend long), which can tighten credit for everyone.
FAQ
Does inversion guarantee a recession?
No — but the track record is unusually strong. It's a warning, not a certainty.
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