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Glossary
Fixed Income
intermediate

Yield Curve

A plot of interest rates across bond maturities of equal credit quality.

The yield curve plots interest rates for bonds of equal credit quality — most commonly U.S. Treasuries — across a range of maturities from short-term to long-term.

Under normal conditions it slopes upward, since lenders demand extra compensation for tying up money longer. An inverted curve, where short-term yields exceed long-term yields, has historically preceded most U.S. recessions, often by many months.

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