Spread measures the difference between two things, in this case interest on Austrian bonds vs German bonds. Spread is valuable in cases such as this because it answers the question, “compared to what?”. The particular interest rate on Austrian bonds is not as important as the fact that they are now running a lot higher than they normally do against “the standard” (Germany being the powerhouse of Europe).
Charts without labels are about as annoying as using acronyms without expanding them on first usage. And don’t get me started on charts that don’t start at “zero”, so they can show a tiny change like it’s the end of the world.
In this case, the y axis pretty much has to be basis points. A basis point is one hundredth of a percent.
So the chart shows that Austrian bonds traded about 0.25% higher than German bonds for awhile, but have recently risen to over 1% higher than German bonds.
That’s helpful.
So is the rise indicative of Austrian bonds being preferred over German bonds? explainable as Germany is in the thick of bailing out other countries, maybe making Austria look like a safer place to stash money for a while.
Or is it the reverse? explainable as Austria’s banks getting shaky, and Germany emerging as the remaining economic stronghold.
Agreed on the irritations. Acronyms? At the start of the Cain accusations, the complaints were emerging from what was described as the NRA - which, if not further expanded, is assumed something very different from the National Restaurant Association. Charts not starting from zero? Like “global warming” temperature charts, depicting huge changes which are negligible on a longer scale. Could it have hurt the author to start this chart from 0, which wasn’t that much farther down the axis?