More on Interest Rates
When investing in bonds, understanding their yield is of utmost importance. They reflect the length and interest to be paid to the investor. Here you will learn why yields are indicative of investors' expectations. How would you estimate interest rates in the future using the yield curve?
Using the Yield Curve to Estimate Interest Rates in the Future
Relationship to the Business Cycle
Through assessing the slope of a yield curve on debt instruments such as governmental treasury bonds, investors can estimate the overall health of the economy in the future (i.e. inflation, interest rates, recessions, growth). Inverted yield curves are typically predictors of recession, while positively sloped yield curves indicate inflationary growth.