  In fixed income sector, the yield curve is probably the most observed
indicator by the market for trading and fifinancing purposes. A yield curve
plots interest rates across different contract maturities from short end to as
long as 30 years. For each currency, the corresponding curve shows the relation
between the level of the interest rates (or cost of borrowing) and the time to
maturity. For example, the U.S. dollar interest rates paid on U.S. Treasury
securities for various maturities are plotted as the US treasury curve. For the
same currency, if the swap market is used, we could also plot the swap rates
across the tenors which would be called the swap curve.Even the yield curve can
be at, upward or downward (inverted), however, yield curve is generally
concave. There is a lack of explanation of the concavity of the yield curve
shape from economics theory. We offer in this article an explanation of the
concavity shape of the yield curve from trading perspectives.
