Yield curve

A yield curve shows the relationship between the yields on short-term and long-term bonds of the same investment quality.

Since long-term yields are characteristically higher than short-term yields, a yield curve that confirms that expectation is described as positive. In contrast, a negative yield curve occurs when short-term yields are higher.

A flat or level yield curve occurs when the yields are substantially the same on bonds with varying terms.

A negative yield curve has generally been considered a warning sign that the economy is slowing and that a recession is likely.