Financial Times FT.com

Spectre of yield curve inversion

By Jennifer Hughes in New York

Published: November 28 2005 18:39 | Last updated: November 28 2005 18:39

The Treasury yield curve partially inverted on Monday, sparking chatter that it could be the harbinger of a full inversion – a rare event that often precedes a recession.

The curve is a line plotted from the yields of Treasury borrowings from the shortest term to the longest. It should slope upwards, since lending for longer periods is riskier and needs higher compensation in the form of higher yields.

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