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Market participants prefer the swap-rate curve over the government bond yield curve because?

May 28, 2016
  • The availability of swaps and the equilibrium pricing are driven only by the interaction of supply and demand. It is not affected by technical market factors.
  • The swap market is not regulated which makes swap rates across different countries comparable.
  • Swap curves across countries are more comparable than sovereign bond yield curves because swap curves reflect similar levels of credit risk.
  • Swap curve has 11 maturities between 2 and 30 years. U.S. government bond yield has 4 maturities.

From → Asset Valuation

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