Parallel shift in the yield curve

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Parallel shift in the yield curve

A shift in economic conditions in which the change in the interest rate on all maturities is the same number of basis points. In other words, if the three month T-bill increases 100 basis points (one %), then the 6-month, 1-year, 5-year, 10-year, 20-year, and 30-year rates all increase by 100 basis points as well. Related: Non-parallel shift in the yield curve.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Parallel Shift in the Yield Curve

A change in the yield curve for bonds with different maturities in which the changes in yields occur evenly. For example, given a yield curve for bonds with one-year, five-year, and 10-year maturities, a parallel shift in the yield curve occurs when the yields for all three bonds increase 10 basis points each. See also: Nonparallel Shift in the Yield Curve.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
As shifts in demand for core products interact with innovation and business models, the labor market will have to adapt to parallel shifts in labor demand for skills, education, and flexibility.
ISLAMABAD -- Capital Administration and Development Division (CADD) on Monday decided to move evening classes in morning shift as it is not feasible to run two parallel shifts in Islamabad Model schools and colleges.
Table 7 reveals the fair swap premiums with time to maturity equal to 25 years when [lambda] is -0.1, -0.15, and -0.2, with parallel shifts upward of 0, 2, and 4 percent in the yield curve.
As market conditions change (e.g., mortality patterns, a parallel shift in yield curve), the marking-to-market (MTM) procedure could mean that the longevity swap switches status in the hedger's balance sheet between that of an asset and that of a liability.
Virtually all principles and intermediate texts draw demand and supply curves as parallel shifts in such circumstances, which implicitly assumes that the demand relation is linear.
"But this hasn't been that kind of leadership." Everywhere you go in Richmond, and elsewhere in Virginia, you hear hints of similar, parallel shifts. Don Owens, a tax attorney, is voting for the Democratic presidential candidate for the first time in his life because Bush has been "untrustworthy," and because of the deficits.
It does call attention to a pair of parallel shifts: from what had been a chronic problem of securing adequate fresh water in some parts of the world, to a crisis in more and more parts of the world; and from public to corporate control of much of the water that is available.
Using descriptive statistics, the study finds institutional rates of acceptance as well as the median grade-point average and Law School Admission Test score for entering classes appear to parallel shifts in the number of applications received.
(Duration declines as the proportion of the total income stream paid early increases.)" Cohen further illustrates that "a cash flow's duration is the sensitivity of its present value to a parallel shift in interest rates." Thus the price of a zero-coupon bond is more sensitive to parallel shifts in interest rates than, say, a 10% bond.
A high-risk mortgage security is defined as any mortgage derivative product that has (1) an expected weighted-average life greater than eight years (i.e., "average life" test); (2) an expected weighted-average life that extends by more than four years or shortens by more than five years assuming immediate and sustained parallel shifts in the yield curve of plus or minus 300 basis points, respectively (i.e., "average life sensitivity" test); or (3) an estimated change in the price of more than 16 percent due to an immediate and sustained parallel shift in the yield curve of plus or minus 300 basis points (i.e., "price sensitivity" test).
If single parameter shifts are observed (e.g., parallel shifts outward due to rising income), then the expected supply response can be estimated.
Informed by Deetz's (1992) concept of corporate colonization of the lifeworld, Haraway's (1990, 1992) cyborg identity, Hochschild's (1989, 1997) concepts of the second and third shifts, and Rakow and Navaro's (1993) parallel shift and remote mothering, I discuss the complex and simultaneous paradoxes of women balancing responsibilities of their everyday lives.
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