Level yield curve
Level Yield Curve
Level yield curve.
A level yield curve results when the yield on short-term US Treasury issues is essentially the same as the yield on long-term Treasury bonds.
You create the curve by plotting a graph with yield on the vertical axis and maturity date on the horizontal axis and connecting the dots.
In most periods, the yield on long-term bonds is higher and the yield curve is positive because investors demand more for tying up their money for a longer period.
There are also times, when short-term T-bills yields are higher, that the pattern is reversed and the yield curve is negative, or inverted.