Understanding Yield Curve - Part 1 - Franklin Templeton India®

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Understanding Yield Curves for investing in Debt Funds is easier than you think. In this video we will cover two types of Yield Curve: Normal Yield Curve and Flat Yield Curve. Let's dive in. The Yield Curve is a graph that shows yields of fixed-income securities across different maturity buckets. It helps investors understand the yields they can earn based on their investment tenure.

A Normal Yield Curve slopes upwards, meaning bonds with higher maturity may provide higher yields. This typically happens in a stable economy and investors expect to be compensated with higher yields for taking higher risk with exposure to longer maturity bonds.

A Flat Yield Curve shows similar yields for both short and long-term bonds, signalling economic uncertainty. This results in investors preferring short-term bonds over long-term bonds, as they offer relatively lower risk for similar yields.

We've just explored two types of yield curve, Normal and Flat. But there's more to uncover. Stay with us as we explore more in the next video.

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