Bond yield and 30 year mortgages
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1) 10 year bond yields are highly consistent with most mortgage rates (i.e.
30 year mortgages)
2) Allows policy makers to dampen growth by reducing wealth effect
(higher mortgage costs reduce house prices which make people feel less
wealthy and so spend less) and reducing new house purchases
Output gap and interest rates
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, 1) Output gap is diffence between actual output and its potential
2) positive output gaps push policymakers to raise short term interest rates
to prevent the economy from overheating
Factors effecting bond yields
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1) Credit risk factors (Debt to GDP, Deficit to GDP, repayment schedule)
2) Credit risk indicators (credit ratings, credit default swaps)
3) Macroeconomic variables (inflation, short term rates)
CLS
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1) "Continuous Linked Settlement"
2) Removes settlement risk through PvP by ensuring payment only occurs if
other party can fulfil its obligation
How CDSs reflect bond risk
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Give this one a try later!
1) 10 year bond yields are highly consistent with most mortgage rates (i.e.
30 year mortgages)
2) Allows policy makers to dampen growth by reducing wealth effect
(higher mortgage costs reduce house prices which make people feel less
wealthy and so spend less) and reducing new house purchases
Output gap and interest rates
Give this one a try later!
, 1) Output gap is diffence between actual output and its potential
2) positive output gaps push policymakers to raise short term interest rates
to prevent the economy from overheating
Factors effecting bond yields
Give this one a try later!
1) Credit risk factors (Debt to GDP, Deficit to GDP, repayment schedule)
2) Credit risk indicators (credit ratings, credit default swaps)
3) Macroeconomic variables (inflation, short term rates)
CLS
Give this one a try later!
1) "Continuous Linked Settlement"
2) Removes settlement risk through PvP by ensuring payment only occurs if
other party can fulfil its obligation
How CDSs reflect bond risk
Give this one a try later!
