I thought I would share a really interesting graphic I came across in the New York Times “A 3-D View of a Chart That Predicts The Economic Future: The Yield Curve”. It gives a unique perspective on our economy in terms of interest rates. Currently the yield curve is relatively flat which shows that investors expect mediocre growth in the next few years.
Does this 3-D chart chart give you any valuable insights about the economy or help you better visualize our economy?
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This is a very elegant way of expressing yields.
As I noted in class, the yield curve is indeed flat, but we ought to take the predictive value of interest rates at 7-year and above maturities with a grain of salt — and maybe ought to ignore them altogether. But the NYTimes did this neat chart right: the closer rates are the short rates, and those are what catch your eye.
Do however click on the graph to get the enlarged version — when was the yield curve inverted (short rates higher than long-term rates)? What was the economy like at the time? 6 months later?
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