Chart(s) of the Week: Yield Curves From Around the World

Big news this week as the U.S. yield curve has been flattening rapidly. Why should you care?

Here Bloomberg takes a look at the spread (or difference in interest rates) between 3 month treasury bills and 10 year treasury notes. Notice how inverted spreads (where short term treasuries yield more than long term treasuries) have often been a sign of an imminent recession:

Chart from Bloomberg article found here

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The Relationship Between a Bond’s Price and a Bond’s Yield

In a 2012 survey only 28% of respondents were able to correctly answer this question: “If interest rates rise, what will typically happen to bond prices?” Here is an explanation of how bond prices and yields work, and the answer to the question. [continue reading…]