Yields are very high by "historical" levels and long-term yields are significantly lower than short rates.
When there is persistent deflation, current cash flows are less valuable that future cash flows.
(ie a negative slope)
An inverted yield curve means that yields decrease as maturity lengthens.
Investors will settle for a lower yield now if they think the economy will decline further in the future.
For example in November 2004 the UK government bonds yield curve was partially inverted.
This occurs when the market anticipates falling interest rates.
Strongly inverted Yield-Curves have historically preceded economic depressions.
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