Inversion of yield curve has been the talk of the market in recent months. Technically, inversion of yield curve occurs when near-term USA treasury has a higher yield than further-term treasury.

On 14th August 2019, 2-years treasury yield went higher than 10-years treasury yield for the first time since June 2007.

During normal times, further dated treasury bonds have higher yields due to the longer time needed for it to mature. (think about how you lock in your money for 10 years versus 2 years. you will want to be compensated for higher yields when your money is locked for 10 years!)

However, when investors have bearish views for near-term markets/economy, these investors start buying up further dated bonds.

Since price and yields are inversely proportional, the higher the prices are drummed up, the lower the yields.

Thus, the inversion occurred when the 10