Volume : 3, Issue : 3, March - 2014

Yields Spread as A Leading Indicator for Economy and Stock Market. The Euro Area Case

Gabriel Bistriceanu

Abstract :

 The present paper analyze the possibility of using the yields spread as an indicator of the developments in the economy and stock market on the case of the euro area. Even though there are some limitations of this analysis undertaken, including the lower length of the statistical data series, the use of a long term interest rate calculated as a weighted arithmetic average of the yields of bonds with maturity of ten years for the euro area countries – it can be concluded that, in the euro area, the yields spread can be used as a leading indicator for the developments of GDP and stock market.