Interest Rates Worksheet

Description

Plot and discuss: plot the following 2 series on the same diagram: 10-year Treasury Constant Maturity Rate – daily or monthly frequency; this is the interest rate on the 10-years to maturity US Treasury bond, & the 3-month Treasury Bill Rate (secondary market; this is the interest rates on a 3 month to maturity treasury bill). The plot must be submitted with your assignment. [see notes below for more info]

2. Discuss the data in the plot: 100-150 words. Try to comment on the trend (if any) and discuss the behavior of the data over the business cycle (i.e. the fluctuations) over time. Discuss any interesting/unique behavior you observe. Make sure to discuss the data over time, not only the last few years and the impact of Covid-19.

NOTES:

There are many interest rates that one can find on FRED. Use the info below to find the correct interest rates. You want to graph “nominal interest rates”, so do not use “inflation indexed yields”.

Long term interest rate, specifically the interest rate on 10 years to maturity T-bonds can be found by searching for the following title: “Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity” (daily data is available from 1962 to

present)

Short term interest rate, specifically the interest rate on a 3-month to maturity T-bill can be found by searching for the following title: “3-Month Treasury Bill Secondary Market Rate” (daily data is available from 1954 to present)

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