Two factors are accounting for the somewhat surprising drop in short-term yields.

"First of all, there is a great deal of money seeking out short-term tax-free yields," he said.

In addition, she said, short-term yields were coming under increased pressure to compete with higher long-term yields.

And with short-term yields still high, borrowing remains expensive.

And the market has reflected removal of the threat of an interest rate increase with a drop in short-term yields.

It is inverted when short-term yields are higher.

But until we get some further action from the Federal Reserve, the bulk of the decline in short-term yields is behind us.

But the problem for Italy is that short-term yields are even higher than the benchmark 10-year bonds.

Those who hold that the recession will deepen and cause interest rates to decline further seem eager to lock in current short-term yields.

The company, he said, allocated too much money to buy land and infrastructure for several city blocks, leaving its investors with low short-term yields.