“… short-term interest rates rise to become higher than long-term rates. This can happen because short-term rates are pushed up by Federal Reserve Bank, as it seeks to manage economic growth and keep inflation under control; or it can happen because investors become “risk averse” and put more money into long-term treasuries, which pushes long-term rates down. Or, as illustrated in the first graph here, it can happen when both of those things happen simultaneously, as has been the case over the past year and a half, as the Fed has been pushing short-term rates up, and increasingly defensive investors have been pushing long-term rates down.”

Can’t supply also be a factor, as when government floods the market with short-term securities to fund itself? Might that also lessen the traditional economic impact of an inversion, if deficit spending by government is inherently stimulative?