What is a flattening yield curve?

This phenomenon occurs when the interest rates for bonds with different maturities get closer and closer together, resulting in a flat or nearly flat yield curve. This means that there is little difference between the short and long-term interest rates for bonds of comparable quality. A flattening yield curve can have several causes, such as declining inflation expectations or the expectation of slower economic growth.

It is an important indicator for financial markets because it is often seen as a signal that the economy may be slowing down.

In the financial world, this is often referred to as a flattening yield curve. It can also be a harbinger of an inverted yield curve, which is sometimes considered an indication of an impending recession.