Treasury yield curve inverts: What it means and what does it signal?

Yield curve inversion suggests that the market is becoming more pessimistic about the economic prospects for the near future

On Wednesday, the 365-day treasury bill (T-bill) yield in India rose above the benchmark 10-year bond, signalling a yield curve inversion. The Reserve Bank of India (RBI) sold 364-day notes at a 7.48 per cent yield, the highest since October 2018. The 10-year benchmark 7.26 per cent 2032 bond yield, on the other hand, saw a high of 7.4728 per cent and ended at 7.4547 per cent, as reported by Reuters.

The 364-day T-bill yield has risen by 58 basis points in the last six weeks amid high uncertainty over interest rate hikes and worsening liquidity in the banking system.

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