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opposite is true for shorter
time frame maturity bonds there

yield curves in depth in the
next lesson. Anyways guys take

that return therefore your
yield on that or your return is

bonds and yields. Uh we're
going to be looking at the

is less risk because you're
only waiting three months for

a lot less anyways guys this
was just an introduction into

yields that they're promised as
shown here and also the

so how they compensated they're
compensated with the higher

that is very low however if you
compare that to the 30 year

yields to cover the effect of
the risk. So as you can see on

diagrammatic chart at the
moment but the 30 years high

involved in the 30 year bonds.
They're compensated with higher

obviously we haven't got
numbers here because this is a

time what happens interest rate
changes up and down and they

that you're going to get so the
return you're going to get on

maturity so the lowest you can
go is three months that yield

that are involved in 30 year
yield 30 year bonds they're

has the highest yield because
the people that the investors

the chart the yields with I
mean the bonds with the lower

fluctuate so this this
obviously isn't that attractive

very over exposed for all all
of that time right and in that

chart right here called the
yield curve. They've got the

long term bonds like 30 years
is more risky. Now the reason

the interest rate changes you
know over the course of the 30

for that is because price
changes more over time due to

years hence the reason that the
actual people that you know are

going to be looking at these in
real depth. Um investing in

yield on the Y axis, the
maturity on the X axis. So just

as an introduction into the
next lesson where we're

where we are in the expansion
cycle so not just the expansion

you've obviously got the bond
price but the yield is

particularly to us and also
economists and they use this

do we mean by the yield curve
so as we've been explaining you

thing is always refer back to
that and actually have it drawn

up with the characteristics of
every sort of component so what

future economic activity it can
be used to estimate when we are

cycle but the market cycle that
we looked at previously and the

fact here is that we can use
the bond yield curve to predict

because the lower interest
rates and as a result due to

the inverse correlation bond
prices increases. The important

therefore the bond prices
decreases. Now in contrast for

to promote economic activity
therefore bond yield decreases

yield move inverse are
inversely correlated. So as a

economy slows down. As a result
the Fed reduces interest rates

inflation. As a result the bond
yield will increase and

deflationary condition
inflation decreases and the

rises. Interest rates are
expected to rise to slow down

because that's what we're
trying to understand all the

time. In an expansionary
condition inflation inflation

that inflation. So that's what
the Fed will do to counteract

bond goes up the yield goes
down. Now let's look at it in

two conditions. Of course the
two that we always refer to

Um so by now you probably
understand the bond and its

concepts.

that they do like us when we're
doing this the so-called smart

looking at the chart work
because the thing with a lot of

it comes to actual chart work
there's not much technical work

fundamental economists they
look at a lot of data but when

detail especially when it comes
to graphs as well actually

economy as a whole and of
inflation in particular. This

is the one thing that
economists really do look at in

currency. Bond yields are
excellent indicators of the

the impact of interest rates
and the potential strength of a

know about bonds but there is
slightly more we can know about

information to us as Forex
traders since we can understand

bond yields which is arguably
the most important piece of

causing economic growth. Now,
you understand what there is to

since it is backed by the
government. When there is an

attractive yield on the bond,
that interest rate paid back to

the bond purchaser, this can
cause lots of investment and

So as we know, bonds are used
as a relatively safe investment

directional bias

this fundamental knowledge to
understand okay where is our

trading because at the end of
the day we want to use you know

means for for for our actual
currency pairs that we're

particularly DXY and from that
you can understand what it

know the treasury market and
this had such a big effect on

actual government because there
are government issued bonds you

stocks for example bonds has a
direct correlation with the

everything like that because
unlike other asset classes like

the next few lessons where we
explore yield curves and

probably one of the most
important lessons and obviously

going to be looking at bonds
and yields in depth and this is

So guys we're finally at the
point where we're actually

care.