huned:
this is interesting. why do the rates converge in 2001 and 2007, but diverge in 2003? what does this mean?
(about 1 year ago)
Gerad Suyderhoud:
The difference between the short-term and long-term rates is called the yield curve. When short-term rates are the same as long-term rates, the yield curve is called "flat," when short-term rates are higher than long-term rates the yield curve is called "inverted." The yield curve is inverted now.
An inverted yield curve means that it's cheaper to borrow for a long period than a short period. This means that people expect interest rates to go down in the future. In 2001, after the .com crash, the Federal Reserve cut rates to historic lows, rates have gradually risen over the last few years.
People are probably expecting cuts again given the collapse of the sub-prime mortgage bubble. Hence the flat yield curve.
(about 1 year ago)
Gerad Suyderhoud:
This is especially interesting given the "Smoking in Asia" article in this week's Economist (Sept 22 - 28, 2007). From the article:
"The worry, says Burke Fishburn of the World Health Organization (WHO), is that Asia will follow the western trend, with more women taking up smoking as men quit."
(about 1 year ago)
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