Steep Yield Curve
A steep yield curve is a term used to describe a situation in which long-term interest rates are significantly higher than short-term interest rates. This is usually seen as a sign of a strong economy, as investors are willing to take on more risk in order to earn higher returns. In contrast, a flat or inverted yield curve is seen as a sign of a weak economy, as investors are not willing to take on as much risk.
History of the Term
The term “steep yield curve” was first used in the late 19th century, when economists began to study the relationship between long-term and short-term interest rates. Since then, the term has been used to describe a variety of different economic situations, from periods of economic growth to periods of economic recession. In recent years, the term has become increasingly popular as investors and economists have become more aware of the importance of the yield curve in predicting economic activity.
Comparison Table
| Term | Long-Term Interest Rates | Short-Term Interest Rates |
|---|---|---|
| Steep Yield Curve | Higher | Lower |
| Flat Yield Curve | Similar | Similar |
| Inverted Yield Curve | Lower | Higher |
Summary
A steep yield curve is a term used to describe a situation in which long-term interest rates are significantly higher than short-term interest rates. This is usually seen as a sign of a strong economy, as investors are willing to take on more risk in order to earn higher returns. For more information about this term, you can visit websites such as Investopedia, The Balance, and Bloomberg.
See Also
- Yield Curve
- Interest Rates
- Bond Yields
- Inflation
- Monetary Policy
- Credit Risk
- Liquidity Risk
- Market Risk
- Risk Premium
- Duration Risk
