What is the 'Term Structure Of Interest Rates'
The term structure of interest rates is the relationship between interest rates or bond yields and different terms or maturities. The term structure of interest rates is also known as a yield curve and it plays a central role in an economy. The term structure reflects expectations of market participants about future changes in interest rates and their assessment of monetary policy conditions.
BREAKING DOWN 'Term Structure Of Interest Rates'
In general terms, yields increase in line with maturity, giving rise to an upward sloping yield curve or a "normal yield curve." One basic explanation for this phenomenon is that lenders demand higher interest rates for longerterm loans as compensation for the greater risk associated with them, in comparison to shortterm loans. Occasionally, longterm yields may fall below shortterm yields, creating an "inverted yield curve" that is generally regarded as a harbinger of recession.

Yield Elbow
The point on the yield curve indicating the year in which the ... 
Normal Yield Curve
A yield curve in which shortterm debt instruments have a lower ... 
Flat Yield Curve
A yield curve in which there is little difference between shortterm ... 
Yield Curve Risk
The risk of experiencing an adverse shift in market interest ... 
Inverted Yield Curve
An interest rate environment in which longterm debt instruments ... 
Negative Butterfly
A nonparallel yield curve shift in which long and shortterm ...

Investing Basics
Understanding the Inverted Yield Curve
An inverted yield curve occurs during the rare times when shortterm interest rates are higher than longterm interest rates. 
Investing
Trade Bond ETFs Using Yield Curves
Different types of yield curves provide important insights for trading bondbased securities. 
Bonds & Fixed Income
The Impact Of An Inverted Yield Curve
Find out what happens when shortterm interest rates exceed longterm rates. 
Investing News
U.S. Recession Without a Yield Curve Warning?
The inverted yield curve has correctly predicted past recessions in the U.S. economy. However, that prediction model may fail in the current scenario. 
Investing Basics
Interest Rates And Your Bond Investments
By understanding the factors that influence interest rates, you can learn to anticipate their movement and profit from it. 
Bonds & Fixed Income
Interest Rates, Inflation and the Bond Market
Interest rates, bond prices and inflation all have an impact on one another. 
Bonds & Fixed Income
Advanced Bond Concepts: Yield and Bond Price
In the last section of this tutorial, we touched on the concept of required yield. In this section we'll explain what this means and take a closer look into how various yields are calculated. ... 
Bonds & Fixed Income
Yield Curve
Learn more about how this curve is used to predict changes in economic output and growth. 
Economics
The Effect of Fed Fund Rate Hikes on Your Bond Portfolio
Learn how an increase in the federal funds rate may impact a bond portfolio. Read about how investors can use the duration of their portfolio to reduce risk. 
Bonds & Fixed Income
Bond Yields: Current Yield And YTM
A bond's current yield, also called "bond yield," is the interest it pays annually divided by the bond's price. A stock's current yield, also called "dividend yield," is the sum of its annual ...

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 >> 
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 >> 
What is the correlation between term structure of interest rates and recessions?
Discover the importance of the term structure of interest rates, also known as the yield curve, and its predictive power ... Read Answer >> 
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 >> 
What is the difference between the Daily Treasury LongTerm Rates and the Daily Treasury ...
Find out more about the daily Treasury longterm rates, daily Treasury yield curve rates and the difference between these ... Read Answer >> 
How can I create a yield curve in Excel?
Find out more about the yield curve, what the yield curve is and how to create the yield curve for U.S. Treasury bonds using ... Read Answer >>