Interest Rate Differential Quotes

One component of the leading economic indicators is the yield curve. Bond investors keep a close eye on this, as it illustrates the spread or difference between long-term interest rates and short-term ones.

If inflation-adjusted interest rates decline in a given country, its currency is likely to decline.

We book our exports forward for more than a year, and so we have a fixed rate. We do not get the spot rate that we see in the market every day.

A higher IOER rate encourages banks to raise the interest rates they charge, putting upward pressure on market interest rates regardless of the level of reserves in the banking sector. While adjusting the IOER rate is an effective way to move market interest rates when reserves are plentiful, federal funds have generally traded below this rate.

Ultimately, in the long run we need to immunise our system from being overly responsive to fluctuations in the exchange rate; that is, people should, by and large, be reasonably hedged, or they should borrow more in domestic currency rather than foreign currency.

What did Citibank get out of it? It got the ability to reverse the arbitrage. Actually, what they got was the ability to give themselves a profit, and that saved the bank.

We've seen the volatility at dollar-yen, U.S. Treasurys, JGBs (Japanese government bonds), German bunds.

I will always choose the dollar bill carrying a wildly fluctuating discount rather than the dollar bill selling for a quite stable premium.