Yield Curve
What it does
The Yield Curve viewer plots the current Kenya government bond yield curve — the relationship between a bond's time to maturity and its yield-to-maturity as observed on the NSE. Each point on the curve represents one active bond, with maturity on the x-axis and yield on the y-axis.
A normal (upward-sloping) curve means longer-dated bonds yield more than shorter ones, compensating investors for locking up capital longer. An inverted curve (short yields above long yields) can signal economic uncertainty or tight monetary policy.
When to use it
- Deciding between a 2-year and a 10-year bond — is the extra yield worth the extra duration risk?
- Identifying where the curve is steep (big yield pickup for extending duration) vs. flat (little reward for going longer).
- Tracking yield movements over time — a rising curve means bond prices are falling; a flattening curve often precedes a rate cut.
- Spotting outlier bonds trading significantly above or below the curve — potential mispricing worth investigating.
Reading the curve to decide between 5-year and 10-year bonds
The yield curve shows: 2-year bonds yield 15.8%, 5-year bonds yield 16.1%, and 10-year bonds yield 16.2%. The curve is almost flat between 5 and 10 years — only 10 bps pickup for doubling your duration. In this environment a 5-year bond offers nearly the same income with significantly less interest-rate risk.
Limitations
- Yields are from the most recent NSE daily data scrape — the curve does not update intraday.
- Bonds with no recent trades show stale yields, which may cause kinks in the curve that don't reflect current market conditions.
- The curve uses nominal yields. It does not adjust for WHT differences between FXD and IFB bonds — an after-tax curve would look different.
A steep curve (long yields much higher than short) rewards duration extension. A flat curve means the market expects rates to fall — short bonds may be the better trade if you believe yields will drop, as their prices rise more proportionally than long bonds when rates fall.