An inverted yield curve, where short-term interest rates exceed long-term rates, is generally considered a predictor of:

Why B — An upcoming economic recession

An inverted yield curve — where short-term Treasury yields are higher than long-term yields — has historically been one of the most reliable predictors of an economic recession. It suggests that investors expect the Fed will need to cut rates in the future due to economic weakness. A normal yield curve slopes upward (long-term rates higher than short-term), reflecting the greater risk of lending money for longer periods. An inverted curve signals that the market expects deteriorating economic conditions ahead.