From the Analyze tab, go to Economic Data > Interest Rates > Interest Rate Spreads and pick one. And there’s a whole section on interest rate spreads. Interest rates, foreign exchange, employment, price inflation, debt, education, productivity-you’ll find thousands of data points at the federal, regional, state, and local levels. But under the Economic Data subtab there’s a veritable treasure trove of data-going back decades-thanks to the St. If you’re a thinkorswim charting pro, you know charts typically go back 20 years or so. There are at least three ways to track yield curve spreads on the thinkorswim ® platform. So the yield curve-and changes between points on the curve-are worth keeping an eye on. One of the lessons from the 2008 financial crisis is that pressure on the financial system can mean pressure on the economy. So an inverted yield curve puts pressure on the financial system. Banks pay interest on shorter-term deposits like checking accounts and CDs while collecting interest on mortgages, auto loans, and other long-term commitments. Plus, the banking system relies on a positive-sloping yield curve. Many analysts point to an inverted yield curve as a sign of coming economic malaise because it could signal investors’ shift from stocks and other riskier investments to the relative safety of the U.S. Sometimes that curve flattens out or even turns negative-sloping. This higher interest rate for longer-dated securities compensates investors for higher risks-for example, over time, inflation can erode the real value of long-term bond payments.įIGURE 1: THINK POSITIVE. A “normal” yield curve chart is positive-sloping from left to right across maturities. In “normal” conditions, the yield curve chart is positive-sloping, with shorter-dated maturities yielding less than longer-dated ones (see figure 1). And closer to home, changes in the yield curve can affect your household balance sheet, from the interest you earn on your savings to the payments on your mortgage, to any floating-rate loans you might have. Why, you ask? Interest rates-and the differentials between short-dated and long-dated ones-may give you a hint as to where the economy is headed. You don’t need to be a hardcore Fed watcher or fundamental analysis expert to have at least a passing interest in the yield curve-that chart of government interest rates, from the overnight federal funds rate to the 30-year Treasury bond, and all points in between.
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