One closely watched interest-rate spread has been making news lately as it moves to historically high levels. The yield spread between 10-year interest-rate swaps and 10- year Treasury bonds has risen to 108 basis points (bp), a noticeable increase from the range of 75–85 bp seen earlier this year and well above the 20–40 bp rate that prevailed for most of this decade. The widening spread between a risky instrument (swaps) and a safe instrument (T-bonds) has resurrected fears of a credit crunch and possible increased market volatility.
Suggested citation: "Interest Rates," Federal Reserve Bank of Cleveland, Economic Trends, no. 99-09, pp. 06, 09.01.1999.