Yield Curve

A yield curve is a graphical representation of interest rates on bonds of equal credit quality across different maturities, illustrating the term structure of interest rates.

For example, a normal yield curve slopes upward, indicating higher yields for longer-term bonds. An inverted curve, where short-term rates exceed long-term rates, may signal economic slowdown.

Yield curves are crucial in fixed-income markets, monetary policy analysis, and macroeconomic forecasting. Traders, economists, and risk managers use them to gauge market expectations, price derivatives, and manage interest rate exposure.

Understanding yield curves enables investors to evaluate bond valuations, anticipate economic trends, and structure portfolios aligned with risk and duration objectives in financial markets.