The Neyland Report
Earning - Thriving - Giving Back

Get To Know The Yield Curve

Get To Know The Yield Curve

Some of our Investors have asked us to explain what a Yield Curve is. A yield curve is a graph that shows financial returns of bonds, based on their projected maturity date. The graph shows the bond yields from the shortest to the longest at the time the graph was produced. As with any investment tool, buying bonds entails risk. Your longer maturity bonds involve more risk. As an investor, you may choose to invest in longer maturity bonds to realize a greater financial return. An “inverted yield curve” indicates that the long-term bond returns have dropped below the short term bond returns. A normal yield curve trends upward. If you are an investor who monitors the yield curve on a regular basis, just remember than an inverted yield curve historically signals a coming recession.

While some financial professionals focus on a 3-month rate versus a 10-year rate, here at JCN we focus on the 2-year rate versus the 10-year rate. That portion of the current yield curve has not inverted, which signals good financial news for our bond investors.

Take a look at a recent history of recession possibilities:

Related Articles