longer maturity (x axis) = larger payoff (y axis). If the government is borrowing your money for a longer time, (this is what "buying a bond" is, it's just you giving the gov a loan) then it's only natural that they pay you more at the end of the deal
it's "healthy" that the curve is shaped the way it is, because it means long term investments make more money, which means everyone expects good things in the long-term future.
this curve is dictated by the forces of the market, just like stock prices.
sometimes, and very rarely, it inverts, meaning the long-term bonds start paying less than the short-term ones. This is bad because it means people expect bad things in the future, and opt for short-term bonds instead.
almost every time this "inversion" happens, it is followed by a recession within 2 years. Something like 7 out of 8 inversions were immediately followed by recessions (8/9 if you include the covid crash)
what the he’ll is a yield curve? do you have anything to read that pertains to that….(like articles or something)
supply/demand curve but it's all money
Sorry nothing constructive to add
https://upload.wikimedia.org/wikipedia/commons/a/a7/Yield_curve_20180513.png
longer maturity (x axis) = larger payoff (y axis). If the government is borrowing your money for a longer time, (this is what "buying a bond" is, it's just you giving the gov a loan) then it's only natural that they pay you more at the end of the deal
it's "healthy" that the curve is shaped the way it is, because it means long term investments make more money, which means everyone expects good things in the long-term future.
this curve is dictated by the forces of the market, just like stock prices.
sometimes, and very rarely, it inverts, meaning the long-term bonds start paying less than the short-term ones. This is bad because it means people expect bad things in the future, and opt for short-term bonds instead.
almost every time this "inversion" happens, it is followed by a recession within 2 years. Something like 7 out of 8 inversions were immediately followed by recessions (8/9 if you include the covid crash)