Question

Using readily available data, plot two yield curves:

1. One from January 2017
2. One from January 2019

Based on your understanding of the signals sent by the yield curve:

1. What has happened to the shape of the curve over the last two years?
2. What does this mean for the stock and bond markets?

source: fred.stlouisfed.org

use this source to select a graph.

Answer 1

SOLUTION : a )

	January
3-month Treasury bill rate (percent)	0.53
10-year Treasury bond rate (percent)	2.43
Yield curve slope (basis points)	190
Prediction for GDP growth (percent)	1.8
Probability of recession in 1 year (percent)	5.46

b )

Date	1 Mo	2 Mo	3 Mo	6 Mo	1 Yr	2 Yr	3 Yr	5 Yr	7 Yr	10 Yr	20 Yr	30 Yr
01/02/18	1.29	N/A	1.44	1.61	1.83	1.92	2.01	2.25	2.38	2.46	2.64	2.81
01/03/18	1.29	N/A	1.41	1.59	1.81	1.94	2.02	2.25	2.37	2.44	2.62	2.78
01/04/18	1.28	N/A	1.41	1.60	1.82	1.96	2.05	2.27	2.38	2.46	2.62	2.79
01/05/18	1.27	N/A	1.39	1.58	1.80	1.96	2.06	2.29	2.40	2.47	2.64	2.81
01/08/18	1.30	N/A	1.45	1.60	1.79	1.96	2.07	2.29	2.41	2.49	2.65	2.81
01/09/18	1.27	N/A	1.44	1.60	1.78	1.98	2.09	2.33	2.46	2.55	2.72	2.88
01/10/18	1.31	N/A	1.42	1.59	1.78	1.98	2.08	2.32	2.47	2.55	2.73	2.88
01/11/18	1.32	N/A	1.43	1.58	1.77	1.98	2.09	2.32	2.46	2.54	2.72	2.91
01/12/18	1.31	N/A	1.43	1.59	1.78	1.99	2.12	2.35	2.48	2.55	2.71	2.85
01/16/18	1.33	N/A	1.45	1.63	1.79	2.03	2.12	2.36	2.48	2.54	2.69	2.83
01/17/18	1.31	N/A	1.44	1.63	1.79	2.05	2.15	2.39	2.51	2.57	2.71	2.84
01/18/18	1.29	N/A	1.45	1.63	1.79	2.05	2.17	2.43	2.55	2.62	2.77	2.90
01/19/18	1.28	N/A	1.44	1.62	1.79	2.06	2.20	2.45	2.57	2.64	2.78	2.91
01/22/18	1.27	N/A	1.44	1.65	1.79	2.08	2.21	2.46	2.59	2.66	2.79	2.93
01/23/18	1.26	N/A	1.44	1.63	1.78	2.06	2.18	2.43	2.55	2.63	2.77	2.90
01/24/18	1.25	N/A	1.43	1.63	1.79	2.08	2.20	2.43	2.57	2.65	2.80	2.93
01/25/18	1.23	N/A	1.42	1.64	1.80	2.08	2.20	2.41	2.55	2.63	2.76	2.89
01/26/18	1.24	N/A	1.41	1.64	1.80	2.13	2.24	2.47	2.60	2.66	2.79	2.91
01/29/18	1.28	N/A	1.44	1.66	1.80	2.11	2.26	2.49	2.63	2.70	2.82	2.94
01/30/18	1.49	N/A	1.44	1.66	1.88	2.13	2.27	2.51	2.65	2.73	2.86	2.98
01/31/18	1.43	N/A	1.46	1.66	1.90	2.14	2.29	2.52	2.66	2.72	2.83	2.95