Our four-part Basics series on interest rate swaps concludes with swaps as spreads. Not only does the final chapter draw on the information from the first three, it ties them all together by first asking – then answering – why we never hear more about either the swap market or any indications coming from it.

After the background behind interest rate swaps and the development of the marketplace, then the role of money dealers, Basics #13 shifts to the perspective of swap users. What they are looking for and what that can tell us about the state of the monetary system from this inside perch.

Having run through the basics of interest rate swaps, here in Basics #12 we move on to swap spreads. What they are and why these particular spreads are such a useful indication. We’ll start with money dealers, what spreads mean to them and why it all matters so much to us.

Before we even think about trying to interpret interest rate swap rates and spreads, we need to understand what these things are all about. Swaps are not just the exchange interest rate payments. You can't really understand the eurodollar world without getting the basics of interest rate swaps.