The yield curve remains inverted, having shifted down over the past month. The 3-year, 3-month spread has widened from –52 to –65 basis points (bp), and the 10-year, 3-month from –62 to –70 bp. During this inversion episode, long rates have fallen and short rates have risen. This behavior is more typical than the flattening seen in 1997–98, which was driven primarily by long-rate decreases that reflected an international flight to quality and dollars. Consequently, the current inversion may be more reliable than the previous one as an indicator of an economic downturn.
Suggested citation: "Interest Rates," Federal Reserve Bank of Cleveland, Economic Trends, no. 00-12, pp. 07-08, 12.01.2000.