Treasury Yield Curve Dynamics
| One of the major factors that affect the shape of the Treasury yield curve is investors' expectations for future interest rates, so
the shape of the curve may be used as an indicator of the possible direction in which the market believes interest rates may fluctuate.
Usually upward-sloping (meaning the yields on long-term maturities are higher than the yields on short-term maturities because of the term premium* for holding long-term bonds), the yield curve steepens when yields are expected to rise and flattens, or even inverts, when yields are expected to fall. The following graphs allow you to see how the shape of the yield curve changes over time: |
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| Note: Weekly and monthly values for 1-, 3- and 5-year Treasury yield curve rates are the most widely used ARM indexes
called 'Constant Maturity Treasury', or CMT. Click here for current or historical values.
* as per the "Liquidity Preference" theory, one of the three fundamental theories that attempt to explain the shape of the yield curve. |
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