c instructions plural: an outline or manual of technical procedure : directions d: a code that tells a computer to perform a particular operation 2: the action, practice, or profession of teaching
The yield curve describes the yields for Treasury bills, notes and bonds. It's called a curve because, if it were plotted on a graph, the yields would normally slope up. That's because Treasury bills, which are of short duration, don't usually pay as high a yield as the notes and even longer-term bonds. Why?
Since 1960, an inverted yield curveâone with higher short-term rates than long-term ratesâhas preceded all five recessions. So how does an inverted yield curve signal a coming recession? Although term premiums do change over time, most of the day-to-day movement in the yield curve reflects changes in market expectations of future short-term interest rates. A steepening yield curveâthat is, one with an increasing spread between long- and short-term ratesâusually implies an expectation of higher short-term rates in the future.