What is a yield curve?
The yield curve is a simple financial graph or graph. The chart shows investors from around the world what to expect in the future from the American Federal Reserve. It also shows the effects that will have a reserve for US interest rates, economics and inflation. Yield is commonly defined as a crop or harvest; In this case, the harvest is financial. From the 30-year T-VIZBY to 3 months of T-Bills, future expectations can be rendered on the yield curve chart. People who work in finance, such as bond investors, analyze the yield curve and try to develop their importance for the future. With the chart, bond investors seek to develop different revenues expected for short -term securities compared to the long -term. This is considered a normal yield. Because it is a standard, it is shown on the graph as a positive slope. The curve is turned to the chart when the opposite is paid, and the short -term maturity gives more yield. The federal reserve system checks short -term interest rates; That is dThe reason why short -term maturity distributes lower and longer yields.
The shape of the curve on the chart of the yield curve holds a number of meanings for bond investors, but there are two basic ways to view it. If the shape of the curve is positive, the money position of the federal reserve system is expected to be friendly to the financial market. The friendly financial situation is good for economics and shares and shares. So if the yield curve is steep, it is a good sign for investors.
If the inclination is negatively curved or reversed, it suggests that the attitude of the federal reserve system is hostile. The federal reserve system will be involved in a strategy to try to slow down the economy. They make an increase in short -term interest rates. In general, this indicates a bad set of conditions for the market and economy.
Research has shown that the yield curve is a better predictor of the economy than the study of the stock Trhu. The yield curve has the ability to predict economic events around 12 months in advance. The stock markets can predict only six to nine months in advance. If you are studying a yield curve, it can provide you with an information advantage when purchasing shares, shares and securities.