The gap between the yields on shortterm bonds and longterm bonds increases when the yield curve steepens The increase in this gap usually indicates that yields on longterm bonds are rising faster than yields on shortterm bonds, but sometimes it can mean that shortterm bond yields areInverted yield curve, we consider the curve inverted when the yield differential between the two and 10year Treasury notes becomes negative For simplicity, we will focus on the monthend yield spreads of the two data series Historical Averages As Table 1 indicates, the yield curve inverted eight times, for at leastThis curve, which relates the yield on a security to its time to maturity is based on the closing market bid yields on actively traded Treasury securities in the overthecounter market These market yields are calculated from composites of indicative, bidside market quotations (not actual transactions) obtained by the Federal Reserve Bank of New York at or near 330 PM each trading day Yield Curve In
