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| One-Year Treasury Constant Maturity |
| By Bankrate.com |
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This week |
Month ago |
Year ago |
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One-Year Treasury Constant Maturity
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2.18 |
2.21 |
4.44 |
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What it means:
An index published by the Federal Reserve Board based on the average
yield of a range of Treasury securities, all adjusted to the equivalent
of a one-year maturity. Yields on Treasury securities at constant
maturity are determined by the U.S. Treasury from the daily yield
curve. That is based on the closing market-bid yields on actively
traded Treasury securities in the over-the-counter market.
How it's used:
It's an index that is used to set the cost of variable-rate loans,
particularly adjustable-rate mortgages (ARMs). Lenders use such an
index, which varies, to adjust interest rates as economic conditions
change. They then add a certain number of percentage points called
a margin, which doesn't vary, to the index to establish the interest
rate you must pay. When this index goes up, interest rates on any
loans tied to it also go up. Roughly half of all ARMs are based on
this index. It is volatile and responds quickly to changes in economic
conditions.
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