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The following table shows the nominal interest rate for U.S. Treasury bonds with different maturities...

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Accounting

The following table shows the nominal interest rate for U.S. Treasury bonds with different maturities in September between 2020 and 2022:

Time

6 months

1 year

2 years

3 years

5 years

7 years

10 years

20 years

30 years

30/09/20

0.11

0.12

0.13

0.16

0.28

0.47

0.69

1.23

1.46

30/09/21

0.05

0.09

0.28

0.53

0.98

1.32

1.52

2.02

2.08

30/09/22

3.92

4.05

4.22

4.25

4.06

3.97

3.83

4.08

3.79

Source: U.S. Treasury

Use the liquidity premium theory to answer the following questions:

According to the table, what is the market predicting about the movement of future shortterm interest rates in each of the three periods? Explain your answer using the shape of the yield cur

In September 2021, the spread between the six-month and 10-year Treasury bonds is the highest out of three years. Why is that the case?

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