Contest Update

We’ve only had two entries so far in the year-end contest.  Both are good attempts to explain why 30-year swaps yield less than 30-year Treasuries.

Today’s negative spread, for those keeping score, is just over 16 basis points.  Put in perspective, that’s a 3-point difference in price for today’s Long Bond.

I still have to wonder why a 30-year 4.375% Treasury bond would sell for 97, yet a 4.375% 30-year “bond” issued by a bank would be worth par.



2 Responses to Contest Update

  1. Li says:

    Howard, what is this 30 year corporate? Merry christmas! Li

  2. hhill51 says:

    Hi, Li —

    Hope the kids are enjoying their special seasonal madness. I’m enjoying reading, cooking and writing.

    I put the word “bond” in quotes because I was referring to price of a fixed-rate AA bond implied by the swap rate as compared to the Treasury cash market….


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