With the Fed announcing that the Fed funds target will remain at near zero for thr next two years, wouldn't the front and belly of the LIBOR curve be decreasing and flattening? Also, wouldn't that mean that the market for interest rate swaps to fall, as no one is interested in going floating to fixed as the chances of LIBOR rising has decreased significantly?
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good question A/P. I think the yield curve has already been flattening- check out the treasury daily yield curve.
most if note all long-term maturities have fallen at a higher rate than the shorter term rates in the past week. Im not sure this has much to do with the fed. Maybe the feds announcement is just a declaration that things arent going to get better for a while, and that might induce more flattening. but i think for the most part the trend was underway.
The good thing is that it cant invert lol! How can long term rates get lower than short term if short term is already close to 0??
Id like to hear someone's opinion on your last question
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