Question
Pick a random date in each month in the following two groups (six dates in total). a) Subprime mortgage crisis: March 2007, June 2009, and
Pick a random date in each month in the following two groups (six dates in total). a) Subprime mortgage crisis: March 2007, June 2009, and September 2012 b) Pandemic recession: March 2019, June 2020, and September 2021 2) Collect Daily Treasury Yield Curve Rates from the U.S. Department of Treasury and plot the yield curve graphs in a spreadsheet based on the rates at each selected date. See Instructions on how to plot yield curves at the end of this document. Note that you will need to generate six yield curves in total and put them in two graphs based on their classification groups in 1). 3) Describe and compare the shapes of the yield curves within and across the two groups. 4) Discuss how short-term and long-term interest rates interact to influence the shapes of yield curves during the two most recent crisis periods. Specifically, - Discuss how the shapes of yield curves were affected by the changes of short-term interest rates over the past five years. Your discussion should be based on the Federal Reserves monetary policies that set the federal fund rate, the benchmark for all other short-term interest rates, in order to promote economic growth through low interest rates while containing inflation. - Discuss how the shapes of yield curves were affected by the changes of long-term interest rates over the past five years. Long-term interest rates are primarily determined by market expectations of economic growth and inflation. A natural and popular estimate of economic growth is real GDP growth, taken at a quarterly or on a year-over-year basis, and predicting out one year. In addition, the bond market usually develops a sense of future economic condition based on leading indicators such as stock market, housing market, etc. The real GDP growth and other economic indicators data can be found from public websites such as FRED, BEA, etc. 5) Discuss the similarities and differences between the two financial crises based on the yield curve analysis.
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