SHORT ANSWER
The core idea
The yield curve flattens when the difference between long- and short-term yields narrows. Tightening expectations can lift short yields faster than long yields, while growth concerns can restrain the long end.
THE MECHANISM
What is happening underneath
Flattening often appears late in an expansion when monetary policy becomes more restrictive.
MARKET INTERPRETATION
How investors should read it
It should be interpreted alongside the absolute level and direction of yields.
BONDSTATS TAKEAWAY
The same market move can carry different information depending on which maturity, issuer and risk premium is changing. Read the question together with the underlying concepts rather than treating one price move as a universal signal.
RELATED CONCEPTS
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