Yield Curve

A yield curve is a graphical representation that shows the relationship between interest rates and the maturity dates of debt securities issued by a borrower, typically the government. The curve plots the yields (interest rates) of bonds with equal credit quality but differing maturity dates, ranging from short-term to long-term. The shape of the yield curve provides insights into future interest rate changes and economic activity. Common shapes include normal (upward sloping), inverted (downward sloping), and flat. Each shape can signal different economic conditions; for example, an inverted yield curve is often seen as a predictor of an economic recession.

What is Yield Curve

Definition

Components

• Shapes of Yield Curve

• Normal Yield Curve

• Inverted Yield Curve

• Flat Yield Curve

Economic Implications

Conclusion