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The yield curve is a graphical representation of the yields offered by bonds of the same credit quality across different maturities.
The yield curve shows the yields of bonds of the same credit quality across different maturities. Normally it slopes upward: longer maturities offer higher yields than shorter ones.
An inverted yield curve (short-term rates higher than long-term rates) is regarded as a warning signal for an approaching recession. Historically, over the past 50 years every US recession was preceded by an inverted curve.
For bond investors, the curve shows which maturities currently offer the best risk-reward ratio.
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