An economist observes that over several decades, the interest rates on 30-year home loans and the interest rates on 20-year bonds issued by large companies tend to rise and fall together. Which of the following provides the best explanation for this parallel movement?

Analyzing Divergence in Long-Term Interest Rates

The interest rates on 30-year US mortgages and long-term corporate bonds move in similar patterns primarily because both are considered to have nearly identical levels of default risk.

Forecasting Long-Term Interest Rates