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To: fyodor_ who wrote (32342)	3/20/2001 3:41:04 PM
From: Neil Booth	Read Replies (1) \| Respond to of 275872

could you explain this "inverted yield curve" to me? Well, I'll step in; I traded this stuff for years. It means nothing other than long-term interest rates are lower than short term ones. Long-term rates should mean swap rates of 3 years or more, since swap rates correspond to floating rates. However, people usually use bond yields (of 3 yrs or more again) when talking about long term rates. In the U.S. the 10y swap rate is usually around 1% below long-term fixed mortgage rates (since one is used to hedge the other). A "normal" yield curve is upward-sloping, where rates get gradually higher the further you go out. An inverted curve basically means the markets expect more rate cuts over the next year or so. Neil.