Yield spreads between bonds with long call deferments versus those with short call deferments normally decrease when interest rates are expected to fall.

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Yield spreads between bonds with long call deferments and those with short call deferments normally increase when interest rates are expected to fall because bonds with shorter call deferments are more likely to be called away in a falling interest rate environment, making them less attractive compared to bonds with longer call deferments.

Yield Spreads Between Bonds with Long Call Deferments Versus Those