1 GO TO THE ST LOUIS FEDERAL RESERVE FRED DATABASE AND FIND

1. GO TO THE ST LOUIS FEDERAL RESERVE FRED DATABASE AND FIND DATA ON THE THREE-MONTH TREASURY BILL RATE, THE THREE-MONTH AA NONFINANCIAL COMMERCIAL PAPER RATE, THE 30-YEAR TREASURY BOND RATE, THE 30-YEAR CONVENTIONAL MORTAGE RATE AND THE NBER RECESSION INDICATORS.

A. IN GENERAL, HOW DO THESE INTEREST RATES BEHAVE DURING RECESSIONS AND DURING EXPANSIONARY PERIODS?

B.IN GENERAL, HOW DO THE THREE-MONTH RATES COMPARE TO THE 30-YEAR RATES? HOW DO THE TREASURY RATES COMPARE TO THE RESPECTIVE COMMERCIAL PAPER AND MORTAGE RATES?

C. FOR THE MOST RECENT AVAILABLE MONTH OF DATA, TAKE THE AVERAGE OF EACH OF THE THREE-MONTH RATES AND COMPARE IT TO THE AVERAGE OF THE THREE-MONTH RATES FROM JANUARY 2000.HOW DO THE AVERAGES COMPARE?

D. FOR THE MOST RECENT AVAILABLE MONTH OF DATA, TAKE THE AVERAGE OF EACH OF THE 30-YEAR RATES AND COMPARE IT TO THE AVERAGE OF THE 30-YEAR RATES FROM JANUARY 2000. HOW DO THE AVERAGES COMPARE?

Solution

Recent three month average =0.02%

Average since 2000 =1.76%

There is a significant difference in these two averages. Recent three months average is just 0.02% whereas average since 2000 is 1.76%. The reason for this difference is that in initial years of 2000, the rate of interest was way too high.

d. I did not find 30 year interest rates on the specified website. I can do this if you share the required link.