What it is
The yield curve graphically represents the relationship between bond yields and their time to maturity, typically for U.S. Treasury securities. The most common yield curve plots short-term Treasury bills (e.g., 3-month) against longer-term Treasury bonds (e.g., 10-year, 30-year). A normal yield curve slopes upward, indicating that longer-term bonds offer higher yields to compensate investors for greater duration-risk and inflation expectations.
The shape of the yield curve is a significant economic indicator, often signaling market expectations for future interest rates and economic growth. A steepening curve (long-term yields rising faster than short-term) might suggest expectations of stronger economic growth and higher inflation. Conversely, a flattening curve can indicate slowing growth or impending rate-hikes. An inverted-yield-curve is widely seen as a reliable predictor of future recessions.
Why it matters
The yield curve offers insights into market expectations for future interest rates and economic health, helping you anticipate economic shifts.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice