Yield Curve

When governments or corporations borrow money, they issue bonds across many different time horizons — a 3-month bill, a 2-year note, a 10-year bond, a 30-year bond. Each maturity carries its own yield (the annual return a buyer earns). Plot those yields on a chart — maturity on the horizontal axis, yield on the vertical axis — and the resulting line is the yield curve. The most widely watched version uses U.S. Treasury securities because they are issued in large volumes at many maturities and are considered free of default risk.

The shape of the curve carries meaning. A normal curve slopes upward: longer maturities pay higher yields because lenders typically demand more compensation for tying up money for longer. A flat curve means short and long rates are nearly equal. An inverted yield curve slopes downward, with short rates above long rates — historically one of the most closely watched signals in economics. You can find current government bond yields across countries on the bonds page.

A common confusion: the yield curve is not the same as a single bond's price or yield. It is a snapshot comparing many different bonds simultaneously. Economists read shifts in the curve's shape — steepening, flattening, or inverting — as information about market expectations for growth, inflation, and central bank policy. For background on how bond yields work, see the guide on what financial markets are.