A yield curve inversion happens when short-term government bond yields rise above long-term yields, most commonly measured as the 2-year Treasury paying more than the 10-year. Markets watch it closely because an inversion has preceded every US recession of the past half-century, though it signals direction, not timing.
Equity investors watch earnings. Bond investors watch everything. The rates market is the deepest, most information-dense market on Earth, and it publishes its collective judgment every single day in a curve that most retail investors have never learned to read.
