Riding the Yield Curve

DEFINITION of 'Riding the Yield Curve'

A trading strategy that is based upon the yield curve and used for interest rate futures. Investors hope to achieve capital gains by employing this strategy.

BREAKING DOWN 'Riding the Yield Curve'

Traders riding the yield curve buy long term bonds with the hopes of making a profit as the yields fall with the declining maturity of the bonds.

RELATED TERMS
  1. Normal Yield Curve

    A yield curve in which short-term debt instruments have a lower ...
  2. Flat Yield Curve

    A yield curve in which there is little difference between short-term ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, ...
  4. Yield Elbow

    The point on the yield curve indicating the year in which the ...
  5. Yield Curve Risk

    The risk of experiencing an adverse shift in market interest ...
  6. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments ...
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RELATED FAQS
  1. Why are the term structure of interest rates indicative of future interest rates?

    Learn why economists believe the term structure for interest rates reflects investor expectations for future interest rates ... Read Answer >>
  2. How can the yield curve help me make investment decisions?

    Learn about the yield curve, and discover why this chart is an important economic indicator. How do Treasury bond yields ... Read Answer >>
  3. What is the difference between term structure and a yield curve?

    Understand the difference between the term structure of interest rates and a yield curve, if any. Learn what the yield curve ... Read Answer >>
  4. What are the different formations of yield curves?

    Find out more about the yield curve and yield curve formations, what yield curves measure and the three main types of yield ... Read Answer >>
  5. What is the current yield curve and why is it important?

    Understand what the current yield curve represents, and learn how market analysts commonly interpret various changes in the ... Read Answer >>
  6. What does the yield curve actually predict?

    Find out what an inverted yield curve represents, how it has performed as a leading indicator and why it appears to hold ... Read Answer >>
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