The yield curve is a graph plotting the relationship between the time of a loan and its rate of interest. The yield curve normally slopes upper to the right, shorter-term loans have lower interest rates than longer-term loans.
Periodically, the yield curve “inverts” and short-term rates rise above long-term rates. Yield curve inversion occurs before the bust phase of the business cycle. Although a bust does not follow every yield curve inversion.
Here is Gary North on yield curve inversion:
http://www.garynorth.com/public/department81.cfm
