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![\"India](\"https:\/\/github.com\/stockviz\/blog\/raw\/master\/yield%20curves\/IND.png\")
<\/a>\nNote how in 2014, the curve was “inverted” – short-term rates were higher than long-term rates. This happens more often than one might think. One way to chart it is as a difference between the 10-year yield and the 2-year yield. If it dips below zero, you know the term-structure was inverted:
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![\"India](\"https:\/\/github.com\/stockviz\/blog\/raw\/master\/yield%20curves\/IND.2s10s.png\")
<\/a><\/p>\nBonds are not “boring.” Note the volatility in the 10-year yields, not just in Indian bonds but in US and Euro area as well: Countries in the Euro area have different sovereign credit ratings. So the ECB publishes two rates: one is an aggregation of the whole Euro area and the other that is an aggregation of only the AAA country bonds. The chart above shows how right until the credit crisis hit, AAA<\/em> and ALL<\/em> were right on top of each other and then blew out after that point. This is the market realizing that not all Euro area countries are the same.<\/p>\n Although Indian rates have never been negative, the same cannot be said for others. Here is how the Euro yield curve looked like on October 15, 2018: Corporate bond investors need to be compensated for the credit risk that they take (over and above rate risk.) So corporate bonds tend to trade at a spread over the govvies. They are typically broken up by their credit rating and quoted as a spread: And the market further differentiates between “developed market” and “emerging market” corporates even within the same credit rating. Here is a chart of AAA spreads for US and EM corporate credit: We publish updated rate, credit and currency charts that all investors should track on our Macro Dashboard<\/a>. Do check it out.<\/p>\n
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\nAnd until very recently, short term rates in the US were zero:
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\nThe spikes in spreads are the credit crisis rippling through the system.<\/p>\n