What is the cash register yield curve?
The bond market is the yield curve of the graphical representation of the relationship between revenues and various maturity of debt tools that have a similar credit rating. The revenue curve of the Ministry of Finance is therefore this relationship represented for government debt securities, also referred to as the treasury. The income is essentially a return or interest rate at which a bond investor expects to earn if he buys and holds a specific bond up to maturity. In principle, the duration of the time for which the safety will be held before repayment of the director. In addition, the revenue curve of the Treasury is a picture of the relationship at a certain time and can be used, among other things, to measure and predict economic conditions.
Graphically, the yield curve of the Ministry of Finance is carried out by the yield on the Y -axis and the maturity on the X -axis. Treasures come in various graduation schools such as three months, one year, five years and 10 years. HypotheticallyThe following returns have the following revenues on a certain day and time: 1%, 2%, 4%, 5%. Then there would be a rising slope on the graph of the revenue of the Treasury, which means that investors require a higher return rate for organizing state treasures for a longer period of time. The shape of the curve may have different shapes other than the slope up; For example, when short -term cash registers have higher yields than long -term yields, the curve would bent down, and when short and long -term yields are the same, the curve would be relatively flat.
Between its different functions, the Treasury Revenue curve is generally used as a scale on the debt market, where any debt tool will be determined at a higher rate compared to the Ministry of Finance's secure maturity. For example, if a ten -year treasury is traded with a yield of 5%, then a company bond with the same graduation will offer a higher yield. This is mainly because cash registers are considered less risky compared to most other investments,Therefore, they offer lower returns. In other words, because the treasures are considered less risky, then all other debt products will offer higher rates in the maturity range. In general, this rule is applicable, whether the debt is a loan for a car, mortgage, corporate bonds or other debt -related products.
In addition,Investors use the Revenue Curve of the Treasury as an indicator for the future level of interest rates and measure and compare the value and yields in different maturity. In addition, the revenue curve can be used as an indicator for predicting future economic conditions. For example, a sloping curve down, also referred to as a negative yield curve, can predict recession. On the contrary, the ascending sloping curve suggests that investors expect solid economic growth and growing inflation. On the other hand, it indicates a flat yield curve on the financial markets may be uncertain.