Fixed Income & Yield Curve

What Is Fixed Income?

Fixed income is a broad term for investments that pay a regular, predictable return — most commonly bonds. When you buy a bond, you're essentially lending money to a government or company, and they promise to pay you back with interest.

The most important fixed income market is the US Treasury market — bonds issued by the US government. These are considered the safest investments in the world, and their interest rates (called yields) are the foundation that everything else in finance is priced off of.

Here's what makes this market so important: when Treasury yields move, mortgage rates move. When mortgage rates move, the housing market moves. When the housing market moves, consumer spending moves. The bond market doesn't just reflect the economy — it often leads it.

This is why every major investor, central banker, and economist watches the bond market obsessively. If you're building a morning macro briefing, it has to start with bonds. OpenClaw automates that watch for you.

What Is a Yield?

A yield is the interest rate you earn on a bond. If you buy a 10-year Treasury bond for $1,000 and it pays 4.5% annually, your yield is 4.5%.

The Key Relationship

Here's the key relationship that confuses most beginners: bond prices and yields move in opposite directions. When investors buy bonds (prices go up), yields go down. When investors sell bonds (prices go down), yields go up.

Think of it this way: if you own a bond paying 3% and the market yield rises to 4%, your bond becomes less attractive — its price has to fall to make the 3% competitive. The price drop is how the old bond adjusts to the new yield environment.

When you hear "yields are rising," it means bonds are being sold — usually because investors expect higher inflation or stronger economic growth. When you hear "yields are falling," investors are buying bonds — often a sign they're worried about the economy.

This inverse relationship is the foundation of everything that follows. Master it, and the rest of fixed income makes sense.

What Is the Yield Curve?

The yield curve is a snapshot of yields across different time horizons — from short-term (3 months) to long-term (30 years). Normally, longer-term bonds have higher yields than short-term ones, because you're taking more risk by lending for longer.

Here's what that normally looks like:

This upward slope is called a "normal" or "positive" yield curve. It says: "The economy is healthy, so we expect longer-term investments to pay more."

But sometimes something weird happens — the curve inverts:

When the curve inverts — short-term rates higher than long-term — it has preceded every US recession since 1955. It's the most-watched macro signal in markets. Investors are essentially saying: "We're so worried about near-term turbulence that we'll accept lower yields on long-term bonds just to feel safe."

OpenClaw monitors this automatically. It fetches the 2-year and 10-year yields every morning, calculates the spread, and alerts you if the curve inverts. You get a recession warning before it shows up on cable news.

What Does OpenClaw Automate?

Let's compare the manual bond monitoring workflow to what OpenClaw does:

That's the entire value proposition: turn a manual hour-long ritual into a 30-second email read. The data gathering, calculations, and threshold checks run on schedule. You get the insight without the busywork.

The fi-config.yaml File

OpenClaw's fixed income suite is configured entirely through one YAML file. Here's the fully annotated version with every option explained:

# fi-config.yaml — OpenClaw Fixed Income Config
# Edit this file to customize your monitoring. OpenClaw reads it automatically.

fred:
  api_key: "your_fred_api_key_here"
  # Get a free key at: https://fred.stlouisfed.org/docs/api/api_key.html
  # Takes about 30 seconds to register — completely free

# ── Yield curve ───────────────────────────────────────────────────
yield_curve:
  # These FRED series IDs pull daily Treasury yields
  maturities:
    - { label: "2-Year",  series: "DGS2"  }
    - { label: "5-Year",  series: "DGS5"  }
    - { label: "10-Year", series: "DGS10" }
    - { label: "30-Year", series: "DGS30" }
  alerts:
    inversion: true    # Alert when 2-year yield exceeds 10-year (2s10s inverts)
    spread_threshold: -0.25  # Alert if 2s10s spread goes below this (in %)

# ── Credit spreads ────────────────────────────────────────────────
credit_spreads:
  investment_grade: "BAMLC0A0CM"   # ICE BofA IG Option-Adjusted Spread
  high_yield:       "BAMLH0A0HYM2" # ICE BofA High Yield OAS
  alerts:
    ig_weekly_move:  50    # Alert if IG spread widens by 50+ basis points in a week
    hy_weekly_move: 150    # Alert if HY spread widens by 150+ basis points in a week

# ── Rates environment ─────────────────────────────────────────────
rates:
  fed_funds:   "FEDFUNDS"  # Effective Federal Funds Rate
  sofr:        "SOFR"      # Secured Overnight Financing Rate
  real_rate:   "DFII10"    # 10-year TIPS yield (inflation-adjusted rate)

# ── Inflation breakevens ──────────────────────────────────────────
breakevens:
  five_year:   "T5YIE"    # 5-year inflation breakeven
  ten_year:    "T10YIE"   # 10-year inflation breakeven
  forward:     "T5YIFR"   # 5yr/5yr forward inflation expectation
  alerts:
    move_threshold: 0.15  # Alert if any breakeven moves more than 15bps in a week

# ── Alert delivery ────────────────────────────────────────────────
alerts:
  email: "you@example.com"
  daily_digest: true
  send_time: "07:00"     # Morning brief before markets open

# ── Scheduler ────────────────────────────────────────────────────
scheduler:
  morning_brief:
    script: fi_daily_brief.py
    schedule: "0 7 * * 1-5"   # 7am Mon–Fri

Every field is documented. Every threshold is configurable. You're in complete control — OpenClaw just runs the checks and delivers what you asked for.

The Five Modules

The fixed income series is split into five focused modules. Each one teaches a specific macro signal, then shows you exactly how to automate it with OpenClaw.

Getting Your Free FRED API Key

FRED (Federal Reserve Economic Data) is the source. It's maintained by the St. Louis Federal Reserve and contains every major US economic series, updated daily. It's free, reliable, and used by professional economists worldwide.

Getting your key takes less than 5 minutes:

1. Go to fred.stlouisfed.org

2. Click "My Account" → "Create an Account" (it's free — no credit card needed)

3. After logging in: My Account → API Keys → "Request API Key"

4. Copy the key and paste it into your fi-config.yaml under fred.api_key

Now test it with Python:

# Install the FRED Python library (free)
pip install fredapi pandas pyyaml

# Test your key
python3 -c "
from fredapi import Fred
fred = Fred(api_key='your_key_here')
rate = fred.get_series('DGS10').iloc[-1]
print(f'10-year Treasury yield: {rate:.2f}%')
"

If you see the 10-year yield printed out, you're connected. The FRED API works. You're ready to build your monitoring suite.

Frequently Asked Questions