By Richard M. Salsman
The U.S. Treasury yield curve, depicted by maturities on a horizontal axis and corresponding interest rates (yields) on a vertical axis, is normally upward sloping, with yields on bonds (10-year maturity and beyond) and notes (intermediate term) lying above yields on bills (short term). Infrequently - but importantly, for economic and investment forecasting - the yield curve becomes inverted, with long-term bond yields lying below short-term bill yields.
Over the past half-century in the U.S., yield-curve inversions have been important because they've reliably predicted all seven U.S. recessions, beginning roughly a