DEFINITION of 'Yield Elbow'
The point on the yield curve indicating the year in which the economy's highest interest rates occur. The yield elbow is the peak of the yield curve, signifying where the highest interest rates occurred.
The yield curve is the graphical relationship between the yield and maturity of bonds with different maturities and equal credit quality. Yield curves play an important role in the pricing of bonds, and are referenced by investors and analysts to identify opportunities for realizing high rates of return on certain investments. The yield elbow typically occurs when there are concerns about current or future inflation, and can correspond to low prices for bonds.
BREAKING DOWN 'Yield Elbow'
Three main types of yield curves exist, including normal, inverted and flat. A normal curve is one where longer maturity bonds have a greater yield compared with shorterterm bonds because of the risks associated with time. An inverted yield curve indicates an interest rate environment where the shorterterm yields are higher than the longerterm yields  a possible indicator of an upcoming recession. A flat yield curve happens when the shorter and longerterm yields are close, indicating a potential economic transition. On any type of curve, the yield elbow is the highest point.

Yield Curve
A line that plots the interest rates, at a set point in time, ... 
Normal Yield Curve
A yield curve in which shortterm debt instruments have a lower ... 
Term Structure Of Interest Rates
The relationship between interest rates or bond yields and different ... 
Inverted Yield Curve
An interest rate environment in which longterm debt instruments ... 
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 ...

Investing
Trade Bond ETFs Using Yield Curves
Different types of yield curves provide important insights for trading bondbased securities. 
Markets
Will an Inverted Yield Curve Happen Again?
Explore the causes of inverted yield curves, their frequency, their accuracy in forecasting recessions and whether this type of event can happen again. 
Markets
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. 
Markets
Understanding Term Structure of Interest Rates
The term structure of interest rates is a common method of valuing bonds. 
Investing
The Impact Of An Inverted Yield Curve
Find out what happens when shortterm interest rates exceed longterm rates. 
Investing
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
Yield Curve
Learn more about how this curve is used to predict changes in economic output and growth. 
Managing Wealth
How Bond Market Pricing Works
Learn the basic rules that govern how bond prices are determined. 
Markets
Understanding Interest Rates Inflation And The Bond Market
Interest rates, bond yields and inflation expectations are all correlated. 
Markets
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 ...

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 >> 
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 >> 
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 >> 
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 >> 
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 >> 
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 >>