Humped Yield Curve

DEFINITION of 'Humped Yield Curve'

A relatively rare type of yield curve that results when the interest rates on medium-term fixed income securities are higher than the rates of both long and short-term instruments. Humped yield curves are also known as bell-shaped curves.

BREAKING DOWN 'Humped Yield Curve'

A market with a humped yield curve could see rates of bonds with maturities of one to five years trumping those with maturities of less than one year or more than five years. However, this type of yield curve does not happen very often. Although a humped yield curve is often an indicator of slowing economic growth it should not be confused with an inverted yield curve.

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