How can I create a yield curve in Excel?


You can create a yield curve in Microsoft Excel if you give time for the repayment of bonds and their yield to maturity. The yield curve shows the term structure of interest rates for bonds and term structures can be normal, inverted or flat.

The shape of the yield Curve means, where future interest rates are headed. The X-axis of the graph the yield Curve persisted over the time to maturity, while yield to maturity is located on the Y-axis.

Suppose you want to build a yield curve in two-, five-, 10-, 20 – and 30-year U.S. Treasury bonds (T-bonds). Corresponding yield to maturity of U.S. T-bonds 2.5%, 2.9%, 3.3%, 3.60% and 3.9%.

Now, Follow These Five Steps:

  • Using Microsoft Excel, enter “U.S. Treasury bonds to maturity” in cell A1 and “yield of us Treasury Bonds held to maturity” in cell B1.
  • Next, enter “2” in cell A2 5 in cell A3, “10” in cell A4, “20” in cell A5 and “30” in cell A6.
  • Then, enter “2.5%” in cell “B2”, “2.9%” in cell B3, “3.3%” in cell A4, “3.6%” in cell A5 and “3.9%” in cell A6.
  • Select the cells from A2 by A6 and B2 through B6 together and click Paste. On the graphics tab, select scatter and click the scatter with smooth lines and markers.
  • Next, click on the chart, select chart elements and click on axis titles. For the horizontal axis, input “time to maturity (years)” and “outputs” in the vertical axis Title. Enter “US treasuries yield Curve” in chart Title.
  • In the result, the yield curve for these us bonds are considered normal, because it is concave downward (increasing), and the rates increase as time to maturity, then.

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