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Yield Curve
Posted By: TradersLog
The Yield Curve refers to yields on treasury securities from short to long term maturities. The Yield Curve has historically proved to be an excellent economic indicator. The curve is a series of yields plotted on a graph covering the range of maturities of treasury securities.
The Yield Curve graph begins on the left with treasury securities with the shortest maturities (normally 3 Month Treasuries) and ends with the 30 Year Bonds at the far right of the curve.
A normal yield curve starts off with the short maturity securities and rises steadily as the duration of the security increases. This reflects a normal situation – where investors in shorter term securities are content with a lower return, and conversely expect a higher return on securities with longer maturities.
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