FinWord Mar 27, 2013:

expectation that interest rates will decrease OK. My fault but we are way off on a tangent here. There are plenty of expert sources on the web that describe what an inverted yield curve is and how it can be interpreted better than this discussion. My point was that prospettica may not be referring to an explicit "forecast" of future rates - by, say, a central bank, NGO, economic research institute, etc. - but rather the market expectation/outlook (yield curve being a key indicator). Ann was correct in saying that there is no explicit reference to the indicator being used. Your proposal of "outlook" would cover either explicit forecast or market expectation perfectly.

James (Jim) Davis Mar 27, 2013:

"Not necessarily that ST rates are very high... Yes they might have been even higher. What I mean is that the word "prospettica" suggests a curve of rates over time and a yield curve is rates over maturities, which isn't the same thing. There is not mention of maturities in the text, no mention of LT or ST, so the indication is that this is not about the yield curve. An inverted yield curve is considered a predictor of recession.

FinWord Mar 27, 2013:

Prospettica Not necessarily that ST rates are very high because they have risen, simply that ST rates (market) are higher than LT rates (market). Prospettica could be referring to a central bank forecast...it may equally be referring to the expectation of ST rates in the future as determined by the market (ergo, yield curve). But Ann correctly says the text is not explicit.

James (Jim) Davis Mar 26, 2013:

@Finword An inverted yield curve means that short-term rates are very high because interest rates have risen, while long term rates are low, because they were lower. This is the opposite of a normal situation with higher yields on longer maturities. A yield curve is a picture of now, not something "prospettica".

FinWord Mar 26, 2013:

inverse yield curve I believe this is the actual curve based on market rates applicable over the maturity spectrum