The forward curve is a function graph in finance that defines the prices at which a contract for future delivery or payment can be concluded today.
According to the unbiased expectations hypothesis, forward interest rates predict spot interest rates at the time the loan is actually made, but many analysts dispute whether this is true, as it ignores durational risk.
Investors expecting higher short-term interest rates are more likely to buy bonds maturing in the short term.
A Price forward curve (short PFC) reflects specialties of the commodity market such as: In order to fairly value and manage the profitability of energy products it is thus necessary to capture these seasonal price dynamics in a forward curve term-structure.
A statistical approach examines how spot prices have moved in the past.