Imagine being offered less annual interest for lending for ten years than for lending for two.
01
Go deeper
Inversions have often preceded U.S. recessions. Different maturity pairs can send different signals, and the timing and reliability vary. Expectations and term premiums both influence the gap.
02
Make it concrete
Hypothetical illustration. If the two-year yield is 4.5% and the ten-year yield is 4%, the ten-minus-two spread is −0.5 percentage point.
03
When you read a headline
An inversion is a warning signal, not a recession announcement or countdown.