Swaps spreads trading through government bonds is out of the ordinary, yet it is happening in both the UK and the US. Can government bonds be that risky? Unlikely. But there is a clear supply imbalance and the market is having a hard time digesting billions issued every week.
10-year - 3-month spreads are at extremes. This should be good news given the classic recession indicator of an inverted curve. A strong positive spread indicates good economic growth. The monetary policy is keeping the front-end rates low, but the longer-term extremes may again have to do with supply imbalances.
10-year - 3-month spreads are at extremes. This should be good news given the classic recession indicator of an inverted curve. A strong positive spread indicates good economic growth. The monetary policy is keeping the front-end rates low, but the longer-term extremes may again have to do with supply imbalances.
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