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Glossary of Stock Market Terms

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Yield curve

The graphic depiction of the relationship between the yield on bonds of the same credit quality (y-axis) but different maturities (x-axis(. Related: Term structure of interest rates. Harvey (1991) finds that the inversions of the yield curve (short-term rates greater than long term rates) have preceded the last five US recessions. The yield curve can accurately forecast the turning points of the business cycle. Yield curves can be upward sloping (sometimes called normal) where long-term rates are higher than short-term rates, flat (rates of different maturities are the same), downward sloping (inverted), or humped. Also see Forward Yield Curve.

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