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Finance
Yield Curve Flattening
When the difference between long-term and short-term bond yields gets smaller.
Flattening often happens before recessions. It makes lending less profitable for banks. Persistent flattening can lead to inversion, which is a stronger recession signal.
It's the yield curve getting flatter — long-term rates are not much higher than short-term rates.
Real world: If investors expect the central bank to raise rates soon, long-term yields may rise less than short-term yields, flattening the curve. This can be an early warning of slower growth.
💡 Flattening yield curve is the market's way of saying 'future growth might be weaker'.