A downward-sloping yield curve indicates generally cheaper short-term borrowing costs than long-term borrowing costs.

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A downward-sloping yield curve, also known as an inverted yield curve, indicates that long-term borrowing costs are cheaper than short-term borrowing costs. This is because investors believe that the economy may perform poorly in the future, causing interest rates to decline, making long-term bonds more valuable. As a result, borrowers are willing to pay less in interest for longer-term loans, leading to a downward slope in the yield curve.

A Downward-Sloping Yield Curve Indicates Generally Cheaper Short-Term Borrowing Costs