yield curve

The visual representation of interest rates on a graph, shown for various points in time. For instance, the Treasury yield curve begins with 3-month bills and has points representing 6-month bills, 52-week bills, 2-, 3-, 5-, 10-year notes, and the 30-year bond. The yield curve often refers to the spread between the 3-month Treasury bill and the 30-year Treasury bond. Typically short-term interest rates are lower than long-term interest rates, creating a positive yield curve that is upwardly sloping. However, if short-term rates are higher, that creates an inverted, or negative, yield curve. By looking at the yield curve, it is possible to see what direction interest rates are heading.