Assuming that liquidity and interest rate expectations are both important for explaining the shape of a yield curve, what does a flat yield curve indicate about the market's perception of future interest rates?
Added by Juan Carlos R.
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Step 1: When the yield curve flattens, it means that long-term interest rates are falling more than short-term interest rates, or that short-term interest rates are increasing more than long-term interest rates. Show more…
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