How does the yield curve fit into this?
The yield curve comes from plotting the differences between yields for both short-term and long-term bonds. It typically compares the yields of bonds with equal credit ratings but different maturity dates, including three-month, two-year, five-year, and 30-year U.S. Treasury bonds.
Based on the shape of the yield curve, economists can make several assumptions about the current economy and even potentially predict what it may do in the near future, using various bond interest rate theories, including the market segmentation theory.