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Interest Rates, Spreads, and Volatility

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In the bond market, at least, the last few months provide strong reasons for calling 1998 “the year of the spread.” The big news has not been in interest rate movements as such but rather in the breakdown of traditional relationships between bonds of differing maturity, risk, and issuer. Such changes in the spreads between bonds have plagued portfolios across the board and have been blamed for everything from the downfall of hedge funds to lower bank profits.


Suggested citation: “Interest Rates, Spreads, and Volatility,” Federal Reserve Bank of Cleveland, Economic Trends, no. 98-11, pp. 04-05, 11.01.1998.

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