Are there 4 yield curves or 5? I counted five but many websites cite 4. Which is correct?

Factual Questions
1

Hi,
Are there 4 yield curves or 5? I counted five but many websites cite 4. Which is correct?

I’ve looked at:
normal, steep, inverted, flat and humped. Are there others?
I look forward to your feedback.
davidmich

2

There are certainly more than 5 yield curves. There is certainly at least one for all currencies of repute and sets of instruments you could strip them from. (Example: the USD LIBOR Curve, stripped from the LIBOR rates).

The terms you mentions are qualitative descriptions of a yield curve. E.g. a particular yield curve is “inverted” if rates for long maturities are lower than rates for short maturities. Any yield curve can have any of these properties.

3

Thank you leahcim. Very helpful
davidmcih

4

It’s really just a matter of definition. I’ve used principal component analysis to derive thirty yield curves for a single bond universe (e.g. Canadian federal government bonds) - this was used for risk analysis - e.g. ‘The portfolio is more sensitive than the index to yield curve changes that take the form of component three’.

So you pick a definition best suited for the problem you are solving.

5

Thanks jiHymas. Very helpful.
davidmich