The interest rate yield curve
The yield curve is the plot of the rates as you go out by maturity. The left side is the short rates (i.e. one month) and the right is the long rates (i.e. 30 years). The slope of this curve has been fairly good at predicting where rates are headed over the next few months and the cost of borrowing. Typically, as the economy improves and there is a growing sense of inflation, the yield curve steepens to reflect investors’ belief that a higher return is needed as you go further out in time to compensate for money being in a bond and inflation rising.
