Rational expectations imply that the current long-term interest rate should already incorporate public knowledge of anticipated increases in short rates. Yet, there is a widespread misconception that expected future shifts in the short rate forecast …

An open question in finance and economics is how the beliefs of agents affect the credit cycle and real economic activity. We analyze the impact of beliefs on credit markets in the context of credit rating agencies. We create a measure of rating …

I document a robust pattern in how Treasury market participants' yield curve expectations respond to new information: forecasts for short-term rates underreact to news while forecasts for long-term rates overreact. I propose a new explanation of this …