only the anticipation of falling interest rates will cause an inverted yield curve.
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Yield curve - Wikipedia, the free encyclopediabond. The market's anticipation of falling interest rates causes such incidents. Negative liquidity premiums can also exist if long-term investors dominate the market, but the prevailing view is that a positive liquidity premium dominates, so <span>only the anticipation of falling interest rates will cause an inverted yield curve. Strongly inverted yield curves have historically preceded economic depressions.
The shape of the yield curve is influenced by supply and demand: for instance, if there is a large demand
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