A yield curve plots the yields of bonds from the same issuer, usually a government, against their maturities.
Shapes
- Normal (upward sloping) – longer bonds yield more, reflecting term premium and expectations of stable or rising rates.
- Flat – similar yields across maturities, often during transitions in the rate cycle.
- Inverted – short yields above long yields, typically when markets expect central banks to cut rates; historically often followed by slower growth.
Why it matters for Eurobonds
Eurobond yields are built on top of government or swap curves. When pricing a new five-year euro bond, for instance, the starting point is the five-year mid-swap rate, to which the issuer's credit spread is added. Changes in the curve's shape affect which maturities issuers choose and where investors see value.
General information only, not investment advice.