inverted scale


Inverted scale

A serial bond offering whose bonds with earlier maturity dates have higher yields than bonds with later maturity dates.

Inverted Yield Curve

A yield curve in which the long-term yields on bonds are lower than short-term yields. A normal yield curve trends upward because bondholders expect a larger interest rate for a longer investment; however, if a yield curve turns negative, it indicates that the market believes that demand for long-term debt securities is increasing or will increase, which will drive yields downward. Higher demand for bonds usually occurs when investors believe that stock prices will fall. As a result, an inverted yield curve is a highly bearish indicator and indeed is seen as a predictor of a coming recession. An inverted yield curve is the rarest yield curve. It is also called a negative yield curve.

inverted scale

An issue of serial bonds having yields on short-term securities that exceed yields on long-term securities. An inverted scale is generally caused when investors judge interest rates to be unusually high and expect them to fall.