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Inverted yield curve

• A downward-sloping yield curve that indicates generally cheaper long-term borrowing costs than short-term borrowing costs.

• A chart showing long-term debt instruments having lower yields than short-term debt instruments. Also known as a Negative Yield Curve. See also: Flat Yield Curve; Normal Yield Curve.

• Is the market condition whereby the near-term interest rates are higher than long-term interest rates. For example, the two year rate is greater than the ten year rate; or, the spot (overnight) rate is higher than the thirty year rate. This inversion may be induced or result from changes in monetary policy, foreign exchange movements, immediate liquidity needs within the financial system, constrictions in money/credit and other financial forces.

 Embedded terms in definition
 Debt instrument
Flat yield curve
Foreign exchange
Interest rate
Monetary policy
Negative yield curve
Normal yield curve
Yield curve
 Related Terms

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