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Yield Curve

Glossary

The yield curve is a graph that plots the interest rates of Treasury securities (T-Bills, T-Notes, and T-Bonds) with different maturities. It reflects investor expectations about interest rates and economic conditions.

Types of Yield Curves:

  • Normal Yield Curve: Long-term bonds have higher yields than short-term ones, signaling economic growth
  • Inverted Yield Curve: Short-term bonds have higher yields than long-term ones, often seen as a recession warning
  • Flat Yield Curve: Yields are similar across all maturities, indicating economic uncertainty

Economists and investors monitor the yield curve closely, as an inverted yield curve has historically preceded recessions. See also: Bond Yield, Bonds, Treasury Note, Treasury Bond, Treasury Bill