Search: "yield curve"

Opportunities within the Treasury Yield Curve

Much has been written about the U.S. Treasury yield curve recently – it’s narrowing, it’s widening.  It’s nearly impossible to predict.  While there will always be uncertainty regarding market interest rates, the current shape of the yield curve offers credit unions some opportunities to explore. Consider the decision to borrow funds.  Many credit unions are […]

Is The Yield Curve Flattening?

Going back to the end of 2015, the Federal Reserve has lifted the Fed Funds rate up from its zero lower bound to target a range of 1.25% to 1.50%, with additional tightening anticipated in 2018. Often, when places model risk, it is assumed that when short-term rates move, long-term rates will move parallel.  Thus, […]

Of Bulls and Bears – Margin Impact from Changing Yield Curves

After the blog published on April 21, 2016, we have received a number of comments regarding why we were silent on the industry “conventional wisdom” that a wider yield curve can provide stronger net interest margin, and that a narrower yield curve can squeeze the margin. This can be true, but often is not. All […]

Of Bulls and Bears – Twisting the Yield Curve Is More Than Just a Stress Test

If you’re a financial institution, you need to understand how changes in market rates could affect your financial well-being. That’s what A/LM analysis is for. Traditional A/LM analysis has revolved around simple, instantaneous, and parallel shifts in rates. But in reality, rates have rarely shifted in parallel (not to mention instantaneously). As an example, using […]

Observations On A Steep Yield Curve

The Treasury yield curve is rarely as steep as it is today.  The spread between the 3-month and 10-year has recently exceeded 350 basis points.  In more certain times, steep yield curves are beneficial to credit unions because the rates paid on non-maturity deposits are influenced by the short end of the curve and the […]

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