tag:blogger.com,1999:blog-3795117908334684354.post8136292438233200711..comments2019-06-16T04:20:34.805-07:00Comments on Fragile Equilibrium: The Dark Side of GlobalizationBhttp://www.blogger.com/profile/10483712973280328541noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-3795117908334684354.post-76674294654274454812010-03-28T09:44:29.980-07:002010-03-28T09:44:29.980-07:00Not really - that would be the implication if forw...Not really - that would be the implication if forward corporate yields were below forward govt yields. Swaps are rolling 3m bank risk. The geometric average of rolling 3m risk isn't the same as 10 y risk. <br /><br />Agree on corporate swapping- there are no natural payers to offset that flow.Jameshttps://www.blogger.com/profile/17692425774947319434noreply@blogger.comtag:blogger.com,1999:blog-3795117908334684354.post-15242031457748892712010-03-27T17:28:03.656-07:002010-03-27T17:28:03.656-07:00Thank you, very good point. In all likelihood, the...Thank you, very good point. In all likelihood, the negative swap spreads are a more direct function of corporate treasurers swapping issuance in order to increase near term ROE (which must be done unfunded to preserve balance sheet). From a purely mathematical standpoint, however, it does imply that the forward rate expectations for government debt are higher than forward expectations of bank-to-bank lending.Bhttps://www.blogger.com/profile/10483712973280328541noreply@blogger.comtag:blogger.com,1999:blog-3795117908334684354.post-82908252291453234762010-03-25T18:07:29.382-07:002010-03-25T18:07:29.382-07:00Little off the topic but swaps aren't 10 yrs o...Little off the topic but swaps aren't 10 yrs of bank risk. It's unfunded. It's rolling 3m bank risk. Banks borrow at Libor plus. This is a scary move nonetheless. MorrisonJameshttps://www.blogger.com/profile/17692425774947319434noreply@blogger.com