(1) the short-term interest rate |
(2) the long-term interest rate |
(3) the DJIA |
(4) the NASDAQ Composite Index |
Summarize the interest rates and the stock market index numbers in tables and graphs using a spreadsheet. Give brief explanations why the interest rates and the stock market moved that way.
Use the 3-month T-bill rate for the short-term interest rate, and 10-year T-Note yield for the long-term interest rate.
starting on 12/26/18 and ending on 1/9/19.
This is what I have so far
Short term Int. Rate | Long term Int. Rate | |||
(3 mo T-Bill) | (10 yr T-Note) | (Dow Jones) | NASDAQ | |
26-Dec-18 | $22,878.45 | $6,554.36 | ||
27-Dec-18 | $23,138.82 | $6,579.49 | ||
28-Dec-18 | $23,062.40 | $6,584.52 | ||
31-Dec-18 | $23,327.46 | $6,635.28 | ||
2-Jan-19 | $23,346.24 | $6,665.94 | ||
3-Jan-19 | $22,656.22 | $6,463.50 | ||
4-Jan-19 | $23,466.16 | $6,738.86 | ||
7-Jan-19 | $23,531.35 | $6,823.47 | ||
8-Jan-19 | $23,787.45 | $6,897.00 | ||
9-Jan-19 | $23,879.12 | $6,957.08 | ||
Average | $23,307.37 | $6,689.95 |
You can check the url https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=billRatesYear&year=2019 to get the 3 month T-bill rate and . At each point of time, there are four treasury bill government securities being traded in the secondary market. They are 1 month, 3 month, 6 months and 1 year. They can be alternatively called 4 week, 13 week, 26 week and 52 week respectively. So, 3 month T-bill rate is the 13 week T-bill rate.
Short term Int. Rate | Long term Int. Rate | |||
(3 mo T-Bill) (%) | (10 yr T-Note)(%) |
DJIA |
NASDAQ | |
26-Dec-18 | 2.39 | 2.81 | $22,878.45 | $6,554.36 |
27-Dec-18 | 2.36 | 2.77 | $23,138.82 | $6,579.49 |
28-Dec-18 | 2.35 | 2.72 | $23,062.40 | $6,584.52 |
31-Dec-18 | 2.40 | 2.69 | $23,327.46 | $6,635.28 |
2-Jan-19 | 2.37 | 2.66 | $23,346.24 | $6,665.94 |
3-Jan-19 | 2.36 | 2.56 | $22,686.22 | $6,463.50 |
4-Jan-19 | 2.37 | 2.67 | $23,433.16 | $6,738.86 |
7-Jan-19 | 2.41 | 2.70 | $23,531.35 | $6,823.47 |
8-Jan-19 | 2.41 | 2.73 | $23,787.45 | $6,897.00 |
9-Jan-19 | 2.40 | 2.74 | $23,879.12 | $6,957.08 |
Average | 2.38 | 2.705 | $23,307.07 | $6,689.95 |
Note:
__________________________________________________________________________________________________
Short term Int. Rate | Long term Int. Rate | DJIA | NASDAQ Composite | |||||
(3 mo T-Bill) (%) | Change % | (10 yr T-Note)(%) | Change % | DJIA | Change % | NASDAQ | Change % | |
26-Dec-18 | 2.39 | 2.81 | 22878.45 | 6554.36 | ||||
27-Dec-18 | 2.36 | -1.26 | 2.77 | -1.42 | 23138.82 | 1.14 | 6579.49 | 0.38 |
28-Dec-18 | 2.35 | -0.42 | 2.72 | -1.81 | 23062.40 | -0.33 | 6584.52 | 0.08 |
31-Dec-18 | 2.40 | 2.13 | 2.69 | -1.10 | 23327.46 | 1.15 | 6635.28 | 0.77 |
02-Jan-19 | 2.37 | -1.25 | 2.66 | -1.12 | 23346.24 | 0.08 | 6665.94 | 0.46 |
03-Jan-19 | 2.36 | -0.42 | 2.56 | -3.76 | 22686.22 | -2.83 | 6463.50 | -3.04 |
04-Jan-19 | 2.37 | 0.42 | 2.67 | 4.30 | 23433.16 | 3.29 | 6738.86 | 4.26 |
07-Jan-19 | 2.41 | 1.69 | 2.70 | 1.12 | 23531.35 | 0.42 | 6823.47 | 1.26 |
08-Jan-19 | 2.41 | 0.00 | 2.73 | 1.11 | 23787.45 | 1.09 | 6897.00 | 1.08 |
09-Jan-19 | 2.40 | -0.41 | 2.74 | 0.37 | 23879.12 | 0.39 | 6957.08 | 0.87 |
Average | 2.38 | 2.705 | $23,307.07 | $6,689.95 |
This table helps in analysing the changes in interest rates and stock market indices.
The stock markets, Secondary market of T-bills and the bond markets fluctuate and change for not one, but many reasons, news and expectations. There are various theories too, like the January Effect, because of which investors sell their loss making instruments for the purpose of loss harvesting, and buy them back the next week in the new year to continue on the same position.
Then, there is a huge fall in all the markets on Jan 3rd when the news about the slowdown of Chinese economy, which is a big market for US, surfaced on that day. It was a knee jerk reaction, which got evened out in the next days by increases in the indices and rates.
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