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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.