when the yield curve is normal short term yields are lower than long term yields this is because longer term debt has more duration risk for example a 10 year bond usually yields more than a 2 year bond as the investor is taking a risk that future inflation or higher interest rates could lower the bond s value before it can be redeemed so in this case the yield goes up over time creating an upward yield curve 
the yield curve inverts if yields on longer dated bonds go down while yields on shorter term bonds go up the rise of near term interest rates can tip the economy into a recession the reason why the yield on long term bonds drops below that on short term bonds is because traders anticipate near term economic weakness leading to eventual interest rate cuts investors also look at a variety of leading indicators to predict recession these include the ism purchasing managers index the conference board leading economic index and the oecd composite leading indicator 