yield curve

A chart that plots the interest rate on U.S. Treasury instruments (such as the three-month and 12-month T-bills, and notes and bonds with maturities from two years out to 30 years) against time. The yield curve is a forecast about a year out of what investors think will happen. The most common shape of the yield curve is that of a line that slopes up. This is called a “normal,” or “positive,” curve and relates to an economic expansion. A normal yield curve also means that investors expect interest rates to rise. A downward-sloping, or “inverted,” curve occurs when investors buy more long-term bonds than short-term in expectation of a recession and falling interest rates.