The yield curve is a graphical representation that plots interest rates of bonds, typically government bonds, against their maturities, ranging from short-term to long-term. It's used in the financial markets to gauge the health of the economy and investor sentiment. The shape of the yield curve provides insights into expectations about future interest rates and economic activity.

For example, a normal yield curve, where long-term rates are higher than short-term rates, suggests a positive economic outlook. An inverted yield curve may signal economic downturn as it shows that short-term rates exceed long-term rates, sometimes indicating that investors expect lower rates in the future due to slowing economic growth. A flat yield curve can mean uncertainty or transition periods in the economy.

Organizations might analyze the yield curve for investment decisions or financial modeling, looking at how changes to interest rates might affect them. For instance, higher long-term rates could increase financing costs for some companies. Overall, understanding the yield curve helps in evaluating both macroeconomic conditions and specific financial strategies.