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 money lenders demand for tying up their cash longer. You'll hear investors talk about it because the curve's shape signals economic health: when it's normal (sloping upward), the economy looks stable; when it flattens or inverts (short-term rates higher than long-term), it often warns of a recession coming. For example, if 2-year bonds suddenly pay more than 10-year bonds, that's unusual and makes traders nervous about the future.