What is the Yield Curve?
The yield curve is a chart plotting the yield of an asset against the maturity of the asset. Typically the yield curve is an upward line with decreasing gradient as maturity increases. This makes sense as assets with a longer maturity incorporate more uncertainty and therefore more interest is paid to compensate the additional time risk. Sometimes the yield curve will invert, meaning the short-term yields are higher than the long-term yields. This basically means there is doubt about the ability of the issuer to survive short-term events, but if they do survive then their long-term stability is likely to be acceptable.