flat yield curve

Flattening of the Yield Curve

A change in the yield curve for bonds in which the yield spread on short-term and long-term Treasury bonds decreases. That is, a flattening of the yield curve occurs when either the yield increases for short-term bonds and decreases for long-term bonds, or vice versa. It is important to note that the yield curve is a graphic representation, plotting yield against maturity.

flat yield curve

At a particular time, similar yields on bonds of similar risk at all maturity lengths. During a period of a flat yield curve an investor would receive approximately the same yield on a long-term bond as he or she would on a short-term bond, although the former would be subject to greater price fluctuations.
References in periodicals archive ?
Jonathan Krane, CEO of KraneShares, said, "China has a very flat yield curve with relatively high interest rates versus the US, specifically in maturities under one year.
Inflation expectations, pricing behavior and other factors that affect inflation will be closely monitored and the tight monetary policy stance will be maintained, by keeping a flat yield curve, until there is a significant improvement in the inflation outlook.
The market consultation revealed that the current liquidity situation expressed by a flat yield curve shifts market activity significantly into longer terms, in the OTC markets especially into terms over one year, he added.
But the increases we have seen in the yield curve, coupled with a relatively flat yield curve for real TIPS, warrant an ever-watchful eye to make sure that inflation expectations do not creep up.
An inverted to flat yield curve for much of 2007 limited the bank's ability to make money last year, officials said.
The credit crisis and flat yield curve are shrinking lenders' profit margins and increasing the pressure for consolidation, especially in the retail financial services sector," Mr.
Net warehousing income, which represents the net interest spread between the mortgage rate on a loan and the interest rate paid on a warehouse line of credit, dropped to $245 per loan from $294 per loan in 2005 and $481 per loan in 2004, due to the flat yield curve.
In addition, the compression of the net interest margin due to the flat yield curve and competitive pressures, combined with an increase in our non-accrual loans, all had a negative impact on our profits during our first quarter.
They point to two recent "near misses" in 1995 and 1998, when a flat yield curve did not presage slow growth.
Given the relatively flat yield curve for most of 2003, it did not make economic sense to ride the yield curves, since spreads had narrowed and managers remained concerned with volatility of longer maturity investments.
Today's flat yield curve signals moderate to slow economic growth and expectations for lower inflation--both of which are better for long-term bonds, according to Mark Lay, chairman and CEO of MDL Capital Management Inc.
During fiscal 2007 and 2008, operating performance had been challenged due to the historically flat yield curve environment and periods of narrowing spreads.