What is an Inverted Yield Curve?
The yield curve describes a relationship between short and long term interest rates of US Treasury securities. But, how does this inverted yield affect CD rates and other fixed interest rate investments? An inverted yield curve occurs when the short term interest rates exceed those of long term fixed securities. This phenomenon is an important economic event that impacts corporations, debt instruments, investors and consumers. And, investors should pay particular attention to this occurrence so that they may adjust their portfolios accordingly. One of the reasons why this economic event is so significant is that it is out of the ordinary to have short term interest rates greater than long term rates. In many cases, when interest rates change in this fashion, it can signal an upcoming recession, causing many institutional investors to refinance their debt instruments; an event that affects individual investors and consumers alike. What Does an Inverted Yield Curve Impact? The most signi
