The yield curve: What it is and what it means
The yield curve is one way to look at interest rates. It shows the rates—or yields—being offered by bonds of different maturities. Usually the yield curve is based on U.S. Treasury bonds.
The yield curve is always changing, depending on the direction of interest rates in the marketplace. The shape of the curve is one indicator that economists look at when they try to forecast what's ahead for the U.S. economy and the markets. Fund managers look at it, too, when deciding which securities to hold at a given time.
Click Play below to hear about some of the yield curve's basic shapes.
All investments are subject to risk. Investments in bonds are subject to interest rate, credit, and inflation risk. Past performance does not guarantee future results. While U.S. Treasury or government agency securities provide substantial protection against credit risk, they do not protect investors against price changes due to changing interest rates.
The hypothetical illustrations do not represent the return on any particular investment.