Community Forex Questions
What is spread of yields?
Yield spreads, like bid and ask spreads, are calculated for different assets. Bonds are the most commonly associated asset with yield spreads, and they are calculated in this manner.
A yield spread is the difference in yields between two bonds of equal size and value. As a result, if one bond has a yield of 10% and another has a yield of 5%, the yield spread is only 5%.
This is also applicable to Forex. For example, a high yield spread would look like this. Assume the yield curve for EUR/USD is 20% and the yield curve for EUR/GBP is 5%. Because these are both major currency pairs, calculating the yield spread on them is possible. The yield spread in this case would be 15%, indicating that more people will start to transfer to the EUR/USD pair in search of higher payouts.
A yield spread is the difference in yields between two bonds of equal size and value. As a result, if one bond has a yield of 10% and another has a yield of 5%, the yield spread is only 5%.
This is also applicable to Forex. For example, a high yield spread would look like this. Assume the yield curve for EUR/USD is 20% and the yield curve for EUR/GBP is 5%. Because these are both major currency pairs, calculating the yield spread on them is possible. The yield spread in this case would be 15%, indicating that more people will start to transfer to the EUR/USD pair in search of higher payouts.
Aug 02, 2022 00:18