Yield Curves

Your textbook discusses yield curves. There are numerous news articles referencing the concept since it forecasts where we are in the cycle. For the final essay question, I want you to build your own yield curve and tell me what the curve is saying about the economy. Here is how to build your own yield curve. 1. Read up about yield curves in your textbook or free online sources. 2. A yield curve is essentially a scatter plot which you should do on Excel. The trend line of the scatter plot is the curve. 3. You will need to get the data from FRED. Use the most recent interest rate data. Use the following securities: (i) one month treasury bill, three month treasury bill, 6 month treasury bill, 9 months, five year treasury bond, and 10 year treasury bond. Note: you cannot mix the yields of corporate securities with the government securities suggested above. What does the scatter plot say about the economy – meaning the state of the business cycle?