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One of the most closely watched implications of a negative spread, particularly an inverted yield curve (where short-term Treasury yields are higher than long-term yields), is its potential as a *recession indicator*. Historically, an inverted yield curve has often preceded economic recessions. The idea is that when investors demand higher returns for short-term investments than for long-term ones, it suggests they're worried about the near-term economic outlook and expect slower growth or even a contraction in the future. While not every inverted yield curve is followed by a recession, the track record is compelling enough that economists and market participants pay very close attention to this signal.
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