There is no difference between term structure and a yield curve; the yield curve is simply another name to describe the term structure of interest rates.෴

What Is the Term Structure of Interest Rates?

The 澳洲幸运5官方开奖结果体彩网:term structure of interest rates 🙈is a graph that plots the yields of similar bonds in the Y-ax💟is with the maturities, or time, in the X-axis.

The reason why the term structure of interest rates and a yield curve are the same is because the graph of the term structure of interest rates literally plots different yields being offered by bonds of different maturities. The term stಌructure of interest rates can take one of three yield curve shapes: normal, inverted, or flat.

A normal yield curve m𝓡eans that as the maturity of the bonds increases in time, so do the yields, creating a con🧜vex shape.

An inverted yield curve means shortꦦ-term yields are higher than long-term yields, and the curve slopes downward in a concave fashion. This means yields and maturities are negatively inverted.

A flat yield curve means there is little or no variation between yields and maturities, and all maturities have similar yields. This makes the yield curv🍸e parallel to the X-axis.

Why Does the Term S❀tructure of🍃 Interest Rates Matter?

Generally, the term structure of interest rates is a good measure of future econo🥃mic growth expectations. If there is a highly positive normal curve, it is a signal investors believe future economic growth to be strong and inflation high. If there is a highly negative inverted curve, it is a signal investors believe future economic growth to be sluggish and inflation low. A flat yield curve means investors are unsure about the future.