Term Premia Shock
- By Bilal Hafeez
- 3 min read
One of the unexpected consequences of taper talk, whether the 2013 vintage or the current phase, is how term premia has been re-introduced to the yield curve. Many were expecting term premia at the back-end, such that long-end yields would rise and curves would steepen. However, the larger reaction has been at the front-end. And we’re seeing that across developed markets with large increases in front-end yields in recent weeks.
One of the unexpected consequences of taper talk, whether the 2013 vintage or the current phase, is how term premia has been re-introduced to the yield curve. Many were expecting term premia at the back-end, such that long-end yields would rise and curves would steepen. However, the larger reaction has been at the front-end. And we’re seeing that across developed markets with large increases in front-end yields in recent weeks.
Subscribe to Macro Hive Professional to read this article
and enjoy exclusive professional features such as in-depth analysis, insightful op-eds, and more.
Already have Macro Hive Professional account? Log in