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What is a yield curve? - MoneyWeek Investment Tutorials

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MoneyWeek’s Tim Bennett explains yield curves – what are they? who uses them? and what they can tell you about the economy? Related links… - The basics of bonds - https://www.youtube.com/watch?v=AqTjNU7mQZQ Bonds basics part two – https://www.youtube.com/watch?v=xVcDCsHF_HY Retail bonds: Watch this before you buy one https://www.youtube.com/watch?v=SIFHNzTGeXM How to choose a broker https://www.youtube.com/watch?v=pS5MEvq_gcs An introduction to financial markets https://www.youtube.com/watch?v=UOwi7MBSfhk - What are options and covered warrants? https://www.youtube.com/watch?v=3196NpHDyec - What are futures? https://www.youtube.com/watch?v=nwR5b6E0Xo4 MoneyWeek videos are designed to help you become a better investor, and to give you a better understanding of the markets. They’re aimed at both beginners and more experienced investors. In all our videos we explain things in an easy-to-understand way. Some videos are about important ideas and concepts. Others are about investment stories and themes in the news. The emphasis is on clarity and brevity. We don’t want to waste your time with a 20-minute video that could easily be so much shorter. We’ve already made over 200 financial videos and we add more each week. You can see the full archive here at MoneyWeek videos.
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Text Comments (77)
heng buntheng (9 hours ago)
sir! yield up, currency price up right?
William Chabalala (3 months ago)
this is brilliance
Ioannis Lazaridis (6 months ago)
Hi . 15.9.2018 and Greece is still in big troubles. Bigger troubles than seven years ago i.e. the debt/gdp is higher :-) Would be much better if north Europeans would run the country , or else have to establish a permanent bail out mechanism :-) Did this happen before to any other nation? permanent mechanism of bail out Greece perpetually , sounds good. The politicians have tax free high salary and hundreds of extras that can be 15.000-30.000 euros per month. The two major parties of Greece own about 400.000.0000 Euros to the banks. These parties do not pay nothing back.
Dennis Rapp (6 months ago)
One of the best teachers I've come across....in any subject. This along with the two Bond Basics videos has made simple for me a concept I have struggled for years to understand. Thank you Tim!!
Sumeet Jain (7 months ago)
that was fkin awesome , keep up the good work
Tom Ski (8 months ago)
The risk of investing in government bonds is not close to 0. The money can be worthless or worth less by the time you get it back.
johnfehringer (9 months ago)
Icelandic? Sounds rather more like British jargon to an Icelander. Góð útskýring
Isha Jain (1 year ago)
Genious
Seiko 7 (1 year ago)
This guy is really good!
Rawiri Rogerson (1 year ago)
Excellent summary of how to interpret yield curves.
Superb video - I watched 20 videos trying to understand the IYC and this hits the nail on the head!
Ioannis Lazaridis (1 year ago)
Thank you Tim for your great lessons. Our governments have forced us to learn about finance and markets . Now that we are bankrupted :-) Best Regards from Greece.
Andrei Guevorkian (1 year ago)
1. at 4:41 , as you give them your money for a longer period, why does that make sense for the gov't to pay you more later. What do they do with that money for a longer period to afford to pay you more? Is it because they have the possibility to invest it somewhere else? 2. Isn't the US in debt? What are they doing about that? How does issuing bonds help them, if the person buying the bonds is making a profit out of them on the longer run? Not sure if this one makes sense.
Thomas Headley (3 months ago)
All the institutions in the world hold some sort of debt. Longer duration holds greater risk, thus greater average rate as compensation.
wibas2008 (2 years ago)
Thank you Tim Bennett, this is really helpful to understand. I am subscribing to your channel right away
Prasan H R (2 years ago)
Brilliant Tim.. Why didn't i find this video earlier .. :-)
Lisa Smith (2 years ago)
I make about 250 dollars each day trading options online. If you want to learn what my strategy is simply send me an email here: [email protected] com
SM (2 years ago)
Can you please make a video about the current situation of negative bond yields?
Brian Chilufya (25 days ago)
+Lisa Smith [email protected]
TheIsaacLee (6 months ago)
Lol!
A one legged man (6 months ago)
Sounds legit. I'll email you right away!
Lisa Smith (2 years ago)
I make about 250 dollars each day trading options online. If you want to learn what my strategy is simply send me an email here: [email protected] com
SM (2 years ago)
Thank you for making these. Its amazing how little they teach you about this in University!!
A one legged man (6 months ago)
Take a financial course then.
Rupaal Singh (2 years ago)
Thnx for the insight... Another way to put it Tim, in my opinion, is that for an upward sloping yield curve the long term interest rates are considered to be higher than short term interest rates and vice versa for an inverted yield curve.... hence all about market expectation of short term interest rates that are extrapolated to arrive at the projected long term interest rates.
SonicScooter (2 years ago)
Thanks for that....sub'd............Cheers.
Lisa Smith (2 years ago)
I make about 250 dollars each day trading options online. If you want to learn what my strategy is simply send me an email here: [email protected] com
Adiraj Chauhan (2 years ago)
We can expect US economy to go bust if Trump becomes Prez
Adiraj Chauhan (2 years ago)
If u haven't buried ur head in sand since past 1 year then u must be knowing we have an election going on during which Trump has laid out some disaster policies (if u call them policies) to curb problems that have been created by such policies in the 1st place!
12345 678910 (2 years ago)
Why?
Saeed Seghosime (2 years ago)
I don't understand why an increase in price of Long term bonds ALONE is a reaction to lowered interest rates, if people are looking for an alternative home for their money, why not look at long, medium and short term bonds. if that happens the curve should retain it's normal shape but drops lower as yields across the board are reduced. Please help.
Sean Sheppheard (3 years ago)
Thank you for using US and UK Jargon. I'm from the US but when I travel or do business in the UK I want to aware of the Talk.
arvind jay (3 years ago)
Excellent share mate!
onee (3 years ago)
Could you do a video on how QE effects the yield curve, since Japan didn't have an inverted yield curve since the early 1990's? And pretty much every central bank is trying to do QE right now.
Younas Parvez (3 years ago)
Thanks Tim for the video. Have watched many of them - all very useful. I've recently joined a bank as an Analyst but come from an Engineering background. Can anyone recommend any good courses (university/online) or books that would help me learn the basics/intermediate material. Ideally would like something that would prepare me for a professional qualification. Thanks. x
Younas Parvez (2 years ago)
Hey thanks for getting in touch. I have discovered Investopedia...such a great tool. Also decided to work towards a Chartered Banker :)
Greek Paradise (3 years ago)
I think the guy confuses himself and all of us by saying that the YTM equals the Current Yield. At 10:32 here writes on the board the formula of CURRENT YIELD=Return / Price (annual return for the purchase price) which is absolutely different with the more complicated formula of YTM (total return till maturity).  Please, correct me if Wrong.. thanks
Vikas (3 years ago)
+Greek Paradise where did he say YTM is equal to current yield, I think he just tried to associate inverted curve effect to the yield overall.
bigfriki (4 years ago)
Genious.
P Saluja (4 years ago)
Thank you.. Great video
James (4 years ago)
This guys brilliant!
Nikos V (1 year ago)
love it as well - easy to understand
Loizides George (4 years ago)
Thx !
Jason Leong (4 years ago)
Hi, can u do a tutorial on the duration table construction for bonds?
PeteYova (4 years ago)
Tresuary is the bench mark? Get paid back with paper money....
ingays (4 years ago)
you sir, are amazing ! thank you so much
retipser j (5 years ago)
Thanks for the video,do you have or plan to create a video on Swaps(forex).. If so,it will be great to have,just to understand the nuances.
Chris Hawtin (5 years ago)
Can you compile a video on sipps, qropps and qnupps??????? Would help me a lot..
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SaveEarth (5 years ago)
but isn't it favorable for the govt if people prefer to invest in long term bond?? even if the increase in purchase of long term bond is caused by decrease in interest rates.
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AlwaysHopeful87 (5 years ago)
Thanks for explaining.
MrAni311 (5 years ago)
tim u will be rewarded for this. selfless service
jf feng (5 years ago)
hi, can i know is there any different between effective interest rate and add on interest rate?
Jack Daniels (5 years ago)
Thank you indeed for your time and effort.
herr direktor (5 years ago)
of course nowdays markets are rigged and central banks distort real demand so they can control yeld on bonds, by buying bonds central banks make yeld go down, making ppl invest in the market and buy stuff to get the economy going like we have now, the central banks also produce inflation by interfering in the markets lowering interest rates making big banks if not loan make bets to get the money they would if yelds where higher, high yelds means stable economy low ones disaster
rbmaserang (6 years ago)
it is because icelandic is the hardest language in the world. just today, i got into it at work. everybody thinks english is the hardest language but no, it is icelandic.
Tadas (6 years ago)
good video, thanks, was very interesting
Jahkillian (6 years ago)
GREAT CHANNEL THANKS!!!
arnthorsnaer (6 years ago)
Hi Tim, just for interests sake, what does it mean if something "sounds icelandic"?
akula1055 (6 years ago)
Hi Tim I like your videos, you have a very simple and clear way to explain things so it is easy for anybody to understand the concepts. I would like to see a video of how a stock dividens affects the p/e ratio over time. Thanks
Nazimuddin Ar (6 years ago)
very nicely explained, thanks a lot. I wish i could be your classroom student rather than virtual classroom student.
abofalla (6 years ago)
Awesome, easy explanation saves a lot of time instead of reading stuffed up material ... Thanks a lot Tim.
Emerson Smith (6 years ago)
Thank you Tim. Great Videos!
MoneyWeek (6 years ago)
Had a few requests for other channels - one I like is the Khan Academy. Lots of videos on financial topics and many are good quality. Tim.
MoneyWeek (6 years ago)
mrredolfodias - yes there's also my moneycontent channel which is free too. You'll find another 30 videos there on topics ranging from QE to bonds. Happy viewing!
mrroddias (6 years ago)
Is there any more channels like this that you can share?!
MoneyWeek (6 years ago)
15xspikex15 - already have! See "what are options" "what are futures" and "what are swaps" plus of course "what are derivatives". Happy viewing!
Ryan DeJesus (6 years ago)
Hey Tim, do you think you can make a video about derivates??
Emil Czorniej (7 years ago)
that's about my mater thesis! very interesting subject
Elie Chebli (7 years ago)
you are just AWESOME!
landwarrior82 (7 years ago)
nice and clear
vrservices.today (7 years ago)
brilliant teaching, thanks so much!
Aamir Chaudhry (7 years ago)
Duration and convexity measure the sensitivity of bond prices to interest rate movements. Duration measures the average term of the bond. Generally speaking the greater the duration of the bond the greater the sensitivity of the bond price to interest rate movements. If interest rates are going up you want be holding short duration bonds. If interest rates are going down you want to be holding bonds with greater duration. Follow the link for more info.

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