Inverted Yield Curve

A situation where short-term interest rates are higher than long-term rates. An inverted yield curve occurs when there is demand for short-term credit that drives up short-term rates on instruments like Treasury bills and money-market funds, while long-term rates move up more slowly, since borrowers are not willing to commit themselves to paying high interest rates for many years. An inverted yield curve usually points to an unhealthy economy with high inflation and low levels of confidence.