Consider the following information:
1. 30-Year Fixed Rate Mortgage Average in the United States (MORTGAGE30US)
2. 5/1-Year Adjustable Rate Mortgage Average in the United States (MORTGAGE5US)
The following graph compares the two time series: https://fred.stlouisfed.org/graph/?g=IBQ0
What do we learn from the spread between the two series? Where do you see the spread go in the future? What advise would you give your client regarding debt issuance based on this information?
Please create a thread with your answer. Once you respond, you will be able to see the response of other students. Please respond to the thoughts of at least two other students.
Additional References:
https://www.brookings.edu/wp-content/uploads/2021/09/Losing-the-Inflation-Anchor_Conf-Draft.pdf
