Yield Curve

Yield curve means a chart that shows interest rates on bonds with different maturities. In simple terms, the yield curve compares short-term and long-term bond yields. The yield curve is important because it can show investor expectations about growth, inflation, and future interest rates. A normal yield curve usually has higher long-term yields than short-term yields. For example, investors may compare the 2-year Treasury yield with the 10-year Treasury yield to understand the shape of the yield curve. The yield curve is not a perfect prediction tool. It can give useful signals, but it does not guarantee what will happen to the economy.