Description:

Data reflecting the yields created by the financial markets on similar grade bonds (same credit score) covering different lengths of maturity.

Released:

Always available. For recent bond rates click here

Calculation:

The yield curve can be plotted by simply creating a graph of the government securities with varying maturities. The yield will be on the Y-axis and maturities on the X-axis. The most typical yield curve is shown by plotting the 3 month, 2 year, 5 year, & 30 year US Treasury Debt.

Key Point:

The yield curve provides a roadmap of the current and future economic environment. Generally speaking, the yield on shorter term maturities is lower than on longer term maturities. This creates an upward sloping yield curve because investors require a higher rate of return for tying up their money for a longer period of time. Any divergence away from a normal yield curve provides economists great insights as to future economic conditions as described below: