Intraday Market Thoughts

Archived IMT (2008.10.02)

by Ashraf Laidi
Oct 2, 2008 20:42

GLOBAL YIELD CURVE WATCH: The latest yield curves of the US, EU and UK in the Analytics Section of the website convey the escalating steepness in the yield curves (as measured by the difference between 10 and 2 year yields). As the spreads increase (curves steepen further) bond markets are pricing higher chances of interest rate cuts by the three central banks. The steeper the yield spread, the more it is indicative of slowing economic dynamics and downside risks because as 2-year yields fall relative to 10--year yields, the 10-2 year spread increases, hence the curve in the chart increases. See Deconstructing Yield Curves for more detailed explanation on how to read the curves. Should you have any questions, please do not hesitate to post them in the comments section of the Global Yield Curves.


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