[...]In this article, we study the influence of market liquidity anddynamic trading strategies on the short-run dynamics of theyield curve. Specifically, we focus on the recent behavior ofintermediate-maturity interest rates for evidence of marketliquidity effects arising from the hedging of...

As derivatives markets have grown, thescope of financial intermediation hasevolved beyond credit intermediation tocover a wide variety of risks. Financialderivatives allow dealers to intermediate the risk managementneeds of their customers by unbundling customerexposures and reallocating them...