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.