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This concept was developed by Cambell Harvey, a professor of economics at Fuqua School of Business, Duke University. The yield curve inversion occurs when the effective yield on short-dated government bonds is higher than that on long-dated bonds. This is an unusual situation because normally investors have to be paid a higher rate of interest if they are willing to tie their money up for longer periods. If the yield on the 3-month treasury bond is above the yield on the 10-year treasury bond it means that investors believe that the economy is probably going into recession in the immediate future. For example, by January 2024, the yield curve had been inverted for 12 months, indicating that a recession was imminent and would occur during 2024. Yield curve inversion has been a reliable early indicator of the last 8 recessions in America.

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