Yield Curve Analysis

Yield curve analysis examines the relationship between interest rates (yield) and the time to maturity of debt securities, like government bonds. Typically, a normal yield curve slopes upward, indicating that longer-term investments offer higher returns due to greater risk and uncertainty over time. An inverted yield curve, where short-term rates are higher than long-term rates, can signal economic recession. By analyzing these patterns, investors and policymakers can gauge economic expectations, interest rate trends, and overall market conditions, helping them make informed financial decisions.