Glossary: terms starting with Y
3 terms from Yield curve to Yield to maturity, briefly explained and with a source where possible. All terms from A to Z
- Yield curve
Interest rates for different maturities, shown as a curve. Normally it rises with maturity; an inverted curve has historically often been read as a recession signal.
- Yield curve slope (Term spread, Yield curve steepness)
Difference between long-term and short-term interest rates, for example the ten-year yield minus the three-month rate. According to studies, a good leading indicator of recessions several quarters ahead.
Source: Estrella and Mishkin (1998)
More: Yield curve: what the term structure reveals and why an inverted curve is seen as a warning sign · Methodology: Macro dashboard and regime analysis: methodology
- Yield to maturity (YTM, Redemption yield, Effective yield)
Interest rate at which the discounted payments of a bond exactly equal its price. It is the return you earn by holding the bond to maturity, provided all coupons are reinvested at this rate.
Brief, simplified explanations; not investment or tax advice.