The Romanian yield curve has inverted. What does it mean?

The yield curve plots the returns on government bonds by maturity, starting from the shortest and going up to the longest ones. The chart is closely watched as it can provide interesting indicators about the investors’ perception of future economic trends. Usually, the yield curve slopes upward. Short maturities come with lower yields and, as maturities increase, yields rise, too. Unpredictability and risk are the factors behind it. The longer the investment horizon, the higher the likelihood of unexpected developments. Economic trends of the near future are easier to anticipate than those of the very distant future. Therefore, to invest long-term, investors expect a risk premium, meaning a higher yield to reflect the higher risk they take. This turns a “normal” yield curve into an upward slope, with increasing returns on longer investment terms. It is not the direction alone, but

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