November 15, 2006
The Yield Curve
Okay, this is cosmic: Ben Hyde explains the yield curve (in short: it’s a map of interest rates for various points in the future, and is a rough measure of investors’ optimism) and links to a super-cool animation that shows its fluctuations from 1977 ‘til now.
It takes a bit of reading to understand exactly what it is what you’re looking at, but once you do, it’s pretty amazing.
For instance, here’s the yield curve for December 1979:
And for January 2004:
And based only on what you know about those two moments in time, you can probably begin to guess how to interpret the curve. So what do you think today’s looks like?