I've been trying to philosophize what this means without actually looking it up.
So here are my rambling thoughts.
The interest rate on the bonds is driven by demand to hold those bonds. As demand goes up, the interest rate goes down.
When the long term yield drops below the short term yield then that is an indicator that people are not expected to be spending money over that period of years of the long term bond.
You don't buy a long term bond if you have plans to spend that money in a shorter period of time.
When people start saving instead of spending, a debt driven economy has a fit.
The greater portion of the population that shift from a life of debt to a life on the other side the lower the yield on bonds as there are more potential investors than bonds for those investors to buy.
It would be no coincidence that "I'm debt free" threads are starting to appear at a time when the bond curve is flattening. This is money shifting.
So to some extent a flattening or negative is a sign that people are getting tired of being in the rat race. By tightening up their habits to eliminate debt, consumption falls, and the economy slows.
Each time in my adult life time this solidifying of moving from debt has been averted by government interaction.
So without having read about this, those are my thoughts. I'd welcome input.
