What Is The Yield Curve? Why Is It Important? 10

The shape of the yield curve gives us important indications of what the future holds for the economy

It is widely believed that the Fed only controls “short term” rates. “Short term” in conventional market wisdom means up to the 2 year mark on the yield curve, that is, US 2y yields.

Hence, yields up to the 2y mark are “supposed” to move the most when the Fed changes the Fed Funds Rate.

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