Yield Curve
A graph of Treasury yields across all maturities — from 3 months to 30 years — that maps the term structure of interest rates at a given moment.
The yield curve plots the yields of U.S. Treasury securities from the shortest (3-month T-Bill) to the longest (30-year T-Bond) maturity. Under normal conditions the curve slopes upward — investors demand higher yields for lending money longer because of inflation and uncertainty risk over time.
The shape of the curve is one of the most powerful macro signals available. A steep curve suggests growth expectations and accommodative Fed policy. A flat curve signals uncertainty. An inverted curve — where short yields exceed long yields — has preceded every U.S. recession in the last 50+ years.
For risk asset traders, the yield curve is not just an academic chart — it tells you where economic momentum is headed and how tight financial conditions really are.
Related Terms
2s10s Spread
The yield difference between the 10-year and 2-year U.S. Treasury notes — the most widely cited gauge of yield curve shape and recession risk.
IntermediateCarry (Rates)
In fixed income, the net income earned by holding a bond position after financing costs — positive carry means the bond yields more than its funding rate.
AdvancedCurve Flattening
When the yield spread between long- and short-term Treasuries narrows — short yields rising faster than long yields, or long yields falling faster.
AdvancedCurve Steepening
When the yield spread between long- and short-term Treasuries widens — usually as long yields rise faster than short yields, or short yields fall faster.
AdvancedDovish
A monetary policy stance favouring lower interest rates and easier financial conditions to support growth and employment — the opposite of hawkish.
IntermediateHawkish
A monetary policy stance favouring higher interest rates and tighter financial conditions to combat inflation — the opposite of dovish.
IntermediateInverted Yield Curve
When short-term Treasury yields exceed long-term yields — historically the most reliable leading indicator of U.S. recession.
IntermediateLeading Indicator
An economic data point that tends to move before the broader economy — useful for anticipating turning points before they show up in lagging hard data.
IntermediateQuantitative Tightening (QT)
A central bank's deliberate shrinkage of its balance sheet by allowing bonds to mature without reinvestment, draining liquidity from the system.
AdvancedRecession
A significant economic contraction — commonly defined as two consecutive quarters of negative GDP growth — that hits corporate earnings and risk assets hard.
BeginnerT-Bill
Short-term U.S. Treasury debt maturing in 4, 8, 13, 26, or 52 weeks, sold at a discount to face value rather than paying coupon interest.
BeginnerT-Bond
Long-term U.S. Treasury debt with 20- or 30-year maturities — the most sensitive to interest rate changes among Treasuries.
IntermediateT-Note
U.S. Treasury notes with maturities of 2, 3, 5, 7, or 10 years, paying semi-annual coupon interest — the most widely traded government securities.
IntermediateTerm Premium
The extra yield investors demand to hold longer-term bonds instead of rolling short-term bills — compensation for duration, inflation uncertainty, and supply risk.
AdvancedTreasury
U.S. government debt securities issued by the Department of the Treasury — the global benchmark for risk-free rates and the deepest bond market in the world.
Beginner