On rare occasions, the yield curve can flip (invert) when the yield of shorter-term treasury bonds surpass that of longer-term bonds. Higher yields for short-term bonds means that investors are selling and the price for those securities is falling.

https://cdn.substack.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fb4ad6df5-f097-4260-bb84-d4bc739345fe_1600x757.png [Larger image]

Above is the current yield curve, courtesy of Bloomberg. As you can see from the table at the bottom, the curve has already begun to invert. The 3 year treasury bond is already yielding higher than the 5Y, 7Y, 10Y and 30Y.

This is because it’s a signal of investors losing confidence in the near-term health of the economy. A loss of confidence usually results in capitulation which can be enough to pop debt bubbles.