A plain explanation of the signal everyone keeps citing

A yield curve just plots interest rates across different loan durations, from a few months to thirty years, for debt considered essentially risk-free.

Under normal conditions longer loans pay more, because tying up money for longer carries more uncertainty. When that order flips — when short-term rates pay more than long-term ones — it usually means lenders expect conditions, and rates, to fall later.

The curve does not predict anything on its own. It is a mirror of collective expectations, which is exactly why it moves before the events it is so often credited with forecasting.