Difference between revisions of "Yield curve"
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| − | The '''yield curve''' is a curve that plots -[[interest rate]]s over different maturity times for bonds having otherwise equivalent characteristics.<ref>[http://www.investopedia.com/terms/y/yieldcurve.asp Investopedia - Yield Curve]</ref> Equivalently for commodities, a curve that plots the forward prices (that is, prices for commodities with differing future delivery dates) is called a ''forward curve''. A commodities forward curve that is upward sloping is said to be in ''contango'' and a | + | The '''yield curve''' is a curve that plots -[[interest rate]]s over different maturity times for bonds having otherwise equivalent characteristics.<ref>[http://www.investopedia.com/terms/y/yieldcurve.asp Investopedia - Yield Curve]</ref> Equivalently for commodities, a curve that plots the forward prices (that is, prices for commodities with differing future delivery dates) is called a ''forward curve''. A commodities forward curve that is upward sloping is said to be in ''contango'' and a forward curve that is downward sloping is said to be in ''normal backwardation'' and is considered to be an ''inverted market''.<ref>[http://www.investopedia.com/articles/07/contango_backwardation.asp?viewed=1 Investopedia - Contango vs. Normal Backwardation]</ref><ref>[http://www.investopedia.com/terms/i/invertedmarket.asp Investopedia - Inverted Market]</ref> Similar to a commodity that is in contango, an upward sloping yield curve is called a ''normal yield curve'' or ''positive yield curve''.<ref>[http://www.investopedia.com/terms/n/normalyieldcurve.asp Investopedia - Normal Yield Curve]</ref> Simililar to a commodity that is in normal backwardation, a downward sloping yield curve is called an ''inverted yield curve''.<ref>[http://www.investopedia.com/terms/i/invertedyieldcurve.asp Investopedia - Inverted Yield Curve]</ref> A yield curve indicating short term interest rates and long term interest rates as equal for otherwise equivalent bonds is called a ''flat yield curve''.<ref>[http://www.investopedia.com/terms/f/flatyieldcurve.asp Investopedia - Flat Yield Curve]</ref> |
==Citations== | ==Citations== | ||
Latest revision as of 22:37, September 16, 2016
The yield curve is a curve that plots -interest rates over different maturity times for bonds having otherwise equivalent characteristics.[1] Equivalently for commodities, a curve that plots the forward prices (that is, prices for commodities with differing future delivery dates) is called a forward curve. A commodities forward curve that is upward sloping is said to be in contango and a forward curve that is downward sloping is said to be in normal backwardation and is considered to be an inverted market.[2][3] Similar to a commodity that is in contango, an upward sloping yield curve is called a normal yield curve or positive yield curve.[4] Simililar to a commodity that is in normal backwardation, a downward sloping yield curve is called an inverted yield curve.[5] A yield curve indicating short term interest rates and long term interest rates as equal for otherwise equivalent bonds is called a flat yield curve.[6]