What is described as a nonparallel movement in the yield curve?

A twist in the yield curve refers specifically to a nonparallel movement in interest rates along different maturities. This occurs when interest rates for shorter or longer-term securities change at a different rate than those for intermediate-term securities, causing the yield curve to bend rather than move in a parallel fashion.

For example, if short-term rates rise but long-term rates remain stable, the yield curve will exhibit a twist, indicating changes in expectations about economic conditions, inflation, or monetary policy that differ across maturities. This phenomenon can provide valuable insights into market expectations and the economic outlook.

In contrast, a spread typically refers to the difference between yields on different securities, such as corporate bonds versus government bonds, rather than movements of the yield curve itself. A shift is characterized by parallel movements in rates across all maturities, while flat generally describes a situation where the yield curve has little to no slope, implying that short-term and long-term interest rates are very similar.