Yield Curve Basics

Discussion in 'Financial Futures' started by maninjapan, Jul 10, 2009.

  1. Guys, still fairly new to financials and the curve, Jsut looking at the curve now it all looks quite flat apart from where it falls away at the 2yr. Any specific reason for the dip down to the 2?

  2. You mean it looks steep up to two years?

    Think of where the fed funds rate is now and you will have your explanation of why it's so low at the very front. After that, up to 3 years or so, the mkt is pricing in the need for the Fed to exit the monetary easing very aggressively.

    As to further out, that's where it gets interesting and you will hear a lot of different views.
  3. free money for banksters.
  4. Martinghoul, thansk for the reply. That makes sense about the short term end of the curve. Anyone with some of the more accepted reasons for the jump to the 10-30yr part of the curve and being relatively flat?
  5. they placed the last part of the 10-30Y reopening legs and are happy to bank on them!
  6. Bernard, I apreciate the comment, but could you explain what that actually means (soory new to financials)
  7. End of the supplies that are usually difficult to digest (the 're-openings') and since they had good results, dealers pushed Tsy up.
  8. Bernard, Im still not sure Im gettign the lingo, if anyone can post a link that gives more of an insight into the basics of these products it would be much appreciated. Not sure what reopenings are.......

    I knew i was getting in over my head, but everyones gotta start somewhere....
  9. The Treasury sometimes “reopens” a security by selling additional amounts of an outstanding issue at auction.


    some more general info
  10. There's actually all sorts of reasons for this, but they all sorta come down to many supply/demand considerations, such as issuance patters, structured notes (PRDC) overhang, pension fund/foreign CB demand etc etc. There's just too many factors to mention.
    #10     Jul 13, 2009