At I have say in the first post, this is something along the line: If you do not know, you are a fool. Therefore, I try to find out what the yield curve means to avoid being a fool. However, I have not integrate this theory into my investment. Therefore, I have very little experience to share in this area.
Just somethings to note: 1) Some trader does use this theory to formulate some macro trading strategy. 2) This is a must for bond trader or bond fund manager. However, the minimum capital is US$10 Million for an effective strategy trading. 3) I keep this knowledge in my mind because there exists some risk-free arbitrage stratedies by using yield curve analysis. However, I have not figure them out yet. The most commonly used strategy has been exposed in LTCM story.
I may share my view on investment in other posts later.
You should know it by now that all professional bond traders (sometime stock market traders) wear a yield curve visor to look into the future to formulate their trading strategy. This link show three interesting issues: 1) an introduction on different kinds of yield curves; 2) an example of stock market and GDP reaction from a given shape of yield curve. 3) an applet to replay the shapes of US yield curve from 1970s.
The above link skip the introduction of delta and epsilon or limit in calculus and tell you the formula directly d(X^n)/dy = n X ^ (n+1).
Yield Curve --> Strategy.
There are many jardons and unexplained items. But who would care anyway.
If you want to get the latest up-to-date info. You could try this link: http://www.pimco.com/
Read the Bill Gross monthly article; however, he usual give a nonrelevant small talk at the beginning and use many jargons and big words in his bond movement discussion.
