What’s is the overall pattern of interest-rate movement these days? I think of rates as tea leaves, except, more reliable if you know how to read them. What do you think?
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January 21st, 2009 at 2:45 pm
Regarding Investment Project information
1) Regarding the Phase 2, Investment Report instructions: What is meant by “competition of assets” as listed under Market Information
2) How far back should we look for “historical price charts”, 3 months, 6 months, 1 year?
January 21st, 2009 at 3:37 pm
For the Project, Phase 2: it should read “competition” and not “competition of assets” (although it was intented to mean competition of companies or assets in a portoflio).
For this project, one year of historial stock prices would be fine.
January 28th, 2009 at 1:34 pm
The overall pattern of the yeild curve is “Normal”. It is upward sloping. So the Interest rates are projected to go up.
January 28th, 2009 at 1:44 pm
I have a question about one of the suggest problems for Chapter 2. In part d. to get the correct answer the calculator must be in “Begin Mode”. What make part d. different from part c.? Is it just because the problem states, “…3 payments began on January 1, 2006″, is the word began the key?
February 13th, 2009 at 10:42 am
I have been following a couple of Yield Curves, i.e. Yield Curve for U.S. Treasury debt certificates and LIBOR curve, and have been running numbers on a probit model. This linked to past events–the predictability of recessions in the economy–have been depicting since late 2006 a jump on the probability of recession–an inverted yield curve. Well, now that we are deep in the period of recession that this analysis was predicting, I have learned to pay more close attention to it. A lot of literature about inverted yield curves depicts them as an anomaly that happens rarely.
In recent years the investment community was thinking about an impending inflationary period and thus did not see, in general, that the long and short rates differences to compensate for inflation as factors related to a downturn. They saw short rates becoming normal, and long rates being held steady because money was flowing into the U.S. following our economic strength. Today, we find ourselves moving towards a severe recession for this year (2009) and a lot of voices in the same investment community thinks there will be a slow recovery in the following year. I just hope that policymakers are able and do short-circuit the down spiral affecting the economy.
The point: the ripple effects of an inverted yield curve remain, but using the inversion as an economic indicator for the US is less reliable than it was in the past