identify and critically evaluate the potential drivers influencing the shape and changes of the yield curve.

  • a resource to identify the current spread of UK Government Bonds vs Bund. This information can be found by navigating to the MARKETS > MARKETS DATA > BONDS, and subsequently clicking on “Government Bond Spreads”. Once you have discovered the present spread, provide a critical analysis of the various elements influencing it. When addressing this task, consider economic, political, and market-related factors, and discuss how these components interact to shape the observed spread. Ensure to incorporate relevant theories, models, or methodologies from our course materials to substantiate your arguments.
  • Continue your exploration on FT.com under MARKETS > MARKETS DATA > BONDS and identify the current yield curve for the United Kingdom. Analyze and interpret the shape of this yield curve, focusing on its implications for economic conditions and investor sentiments. To add complexity, compare the present curve to those observed one week and one month prior. Are there significant changes? If so, what could have provoked these shifts? Please refer to appropriate theories and evidence from the past to substantiate your analysis.
  • Conduct comprehensive research to identify and critically evaluate the potential drivers influencing the shape and changes of the yield curve. When discussing these drivers, you should take into consideration multiple perspectives, such as the term structure theories and central bank policies. Try to delve deeper into the causes behind recent fluctuations and provide a thorough explanation supported by sound economic theory and empirical evidence. Pay particular attention to how these factors interrelate, and present a nuanced understanding of how the yield curve responds to different economic phenomena.