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Sketching the yield curve out to 30 years

Question

Draw the current US Treasury yield curve for maturities from three months to thirty years.

Short answer

Know today's levels and shape before the interview. Plot yields against maturity at the key points (3 months, 2, 5, 10 and 30 years), note whether the curve is upward-sloping, flat or inverted, and explain the shape through expected policy rates and term premia. Being able to discuss what the shape signals about growth and the Fed is the real test.

Adapted from Crack, Heard on the Street, Q5.3.21, p.51; question and answer rewritten by SelfMadeQuant.com.

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