A bet by investors that the future will be worse than the present.
The financial world has been atwitter about the inversion of the yield curve. It is a phenomenon in the bond market in which longer-term interest rates fall below shorter-term interest rates, and has historically been a warning sign that a recession could be on the way.
This all seems obvious to people who are steeped in bond market math and the workings of fixed-income markets, and can be completely perplexing to those who are not.
Maybe a sports gambling analogy will make the intuition clearer.
Any adult can walk into a casino and bet on how an N.F.L. team will do this year. For example, bettors once again expect the New England Patriots to be an excellent team — that they are likely to win 11 or 12 out of their 16 games. Casinos will let you wager on how many games they will win this season.
View the complete August 15 article by Neil Irwin on The New York Times website here.