427 B
427 B
Under Expectations Theory, the shape of the yield curve tells you what the market thinks rates will do:
- Upward sloping (normal) → rates expected to rise
- Downward sloping (inverted) → rates expected to fall
- Humped → rates expected to rise then fall
- Flat → rates expected to stay the same
The yield curve is essentially the market's collective forecast for future interest rates.