Hi guys,
What information can I extract from a widening swap curve (relative to treasuries)? If, say, the 2yr swap spread widens over time, does this tell me that people are expecting rates to rise in the future? What else does it tell me?
I know the swap rate equates the fixed/floating leg present value. If forward rates are higher, the PV of the floating leg is lower, thus a lower swap rate ensues? Can someone please clarify this for me? Thanks.
What information can I extract from a widening swap curve (relative to treasuries)? If, say, the 2yr swap spread widens over time, does this tell me that people are expecting rates to rise in the future? What else does it tell me?
I know the swap rate equates the fixed/floating leg present value. If forward rates are higher, the PV of the floating leg is lower, thus a lower swap rate ensues? Can someone please clarify this for me? Thanks.
