This is an unusual situation in the economy where short-term interest rates are higher than long-term rates. An inverted yield curve occurs when an increased demand for short-term credit drives up rates on treasury bills and money-market funds, while long-term rates move up more slowly because borrowers are not willing to pay for the higher, longer-term rates. An inverted yield curve can indicate an unhealthy economy, marked by high inflation and low levels of confidence. Also called a "negative yield curve."
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