The current yield curve measures where short term and long term interest rates are currently trading. This curve is comprised of US Treasury securities.
A positive or ascending yield curve is when short term yields are lower than long term treasury yields. This normally how an interest rate curve shoudl look during most normal economic conditions
Inverted
Sometimes interest rates may be trading where the yield curve is inverted. This means that short term interest rates are trading higher than longer term yields.
If the Federal Reserve Board (FRB) agressively tightens short term money (lowers interest rates), then short term rates can rise - creating a possible inverted curve.
Most other bonds and debt securities are proced off of current treasury rates. Corporate and other bonds are priced "above treasuries". Treasuries have the least amount of credit risk, so other bonds will always trade higher and above the current yield curve, creating a yield spread.
A positive or ascending yield curve is when short term yields are lower than long term treasury yields. This normally how an interest rate curve shoudl look during most normal economic conditions
Inverted
Sometimes interest rates may be trading where the yield curve is inverted. This means that short term interest rates are trading higher than longer term yields.
If the Federal Reserve Board (FRB) agressively tightens short term money (lowers interest rates), then short term rates can rise - creating a possible inverted curve.
Most other bonds and debt securities are proced off of current treasury rates. Corporate and other bonds are priced "above treasuries". Treasuries have the least amount of credit risk, so other bonds will always trade higher and above the current yield curve, creating a yield spread.
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