Yield Curve

A yield curve is a graph showing the interest rates (or "yields") that the U.S. government pays on its bonds across different time periods—from short-term (3 months) to long-term (30 years). Think of it as a snapshot of how much extra return you get for lending money longer. You'll hear about it in financial news because the shape of the curve signals what investors think about the economy's future. When short-term rates are higher than long-term rates (an "inverted" curve), it historically warns of a recession. For example, if 2-year Treasury bonds pay 5% while 10-year bonds pay 4%, that unusual pattern might spook markets. Retail investors watch the yield curve to gauge economic health and time their moves.