Understanding this indicator
Interest rates connect the price of money today with expectations about the future. Inflation, growth and central-bank decisions all influence government bond yields. Countries may follow different policy paths, yet their yields often share a broader rhythm as global demand and financing conditions change. This indicator brings that common rhythm into view.
The underlying data cover government bond yields across several markets and maturities. We measure how far each yield has moved from a year earlier, rather than dividing it by last year’s level. A change from 2% to 3%, for example, is an increase of one percentage point. This makes the measure easier to interpret even when yields are very low.
The annual changes are adjusted for differences in trend and volatility, then combined using principal component analysis. The resulting line summarises their strongest shared movement. A rising reading points to a strengthening common pattern of upward yield changes; a falling reading points in the other direction. It is a cycle indicator, not the average yield on the bonds in the sample.
Use it to place a local yield move in context. Is one country following a broader interest-rate cycle, or departing from it? Comparing the line with equities, commodity prices and manufacturing activity can help distinguish different economic settings. Rising yields alone do not identify the cause: stronger demand, inflation pressure and changes in policy can produce similar movements for different reasons.
The green line isolates the 3–4-year Kitchin cycle from the historical data; it is a fitted cycle, not a forecast of the next turn. The lower chart shows the 7–10-year Juglar cycle and the 15–25-year Kuznets cycle. Comparing these time scales can reveal why a shorter upswing sometimes sits within a much longer period of weakness. The two main-chart axes use different scales, so compare their timing and direction rather than the height of one line against the other. Historical curves may change as the data are updated.