In our prior post here, we discussed the basic yield curve and why the longer the term, all other things being equal, the greater the risk, AND the greater the cost to finance or lend.
A Parallel Movement of the Yield Curve
Just like the weather or most other items in life, the Yield Curve can change.
Generically, during faster growth periods of time .. think inflation or a faster growing economy, rates are higher.
During slower periods of time, rates may fall or go lower.
Assuming they do this pretty much evenly across the curve, changes look like our hand drawn graph below.
A Parallel Shift Across the Yield Curve.
Next up, real life examples of rates on the Yield curve AND where the Federal Reserve influences rates most on the curve.
Have a Great “Steady Yield Curve Movement” Day!
John A. Kvale CFA, CFP