> For the complete documentation index, see [llms.txt](https://www.bluegamma.io/documentation/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://www.bluegamma.io/documentation/market-data-guides/forward-curves/faqs.md). # Forward Curve FAQs How BlueGamma's forward curves are constructed, what bootstrapping is, how forward curves differ from yield curves, and why a curve can show a kink. #### **How Are Forward Curves Constructed?** We build each forward curve by **bootstrapping** from the latest market swap rates, with the index's latest published fixing (for example SONIA or 6M EURIBOR) anchoring the short end. Bootstrapping works from the shortest tenor to the longest, solving at each step for the discount factor that prices that swap at par, so the curve stays consistent with the market prices it is built from. Forward rates then follow from those discount factors. For the full method, see [How We Bootstrap the Yield Curve](/documentation/methodology/how-to-bootstrap-the-yield-curve.md). For where the inputs come from, see [Where does BlueGamma's data come from?](/documentation/reference/where-bluegammas-data-comes-from.md) *** #### **Are Forward Curves the Same as Yield Curves?** Not exactly. While both represent interest rates over time: * **Forward Curves** project future interest rates based on current market prices. * **Yield Curves** show the interest rates of bonds (or other fixed-income instruments) with different maturities at a single point in time. *** #### **What Causes a Kink in a Bootstrapped Forward Curve?** Kinks or bumps in a bootstrapped forward curve often arise due to: 1. **Illiquidity:** Certain tenors may lack sufficient market activity, causing irregularities in the derived rates. 2. **Demand/Supply Imbalances:** Some maturities may experience higher demand or supply, influencing the pricing for those specific points on the curve. 3. **Data Anchors:** Forward curves rely on market swap rates at specific maturities. If data for one tenor differs significantly, it can create a bump. Such kinks are most common in less liquid parts of the curve or where specific market instruments disproportionately impact the curve’s shape. *** --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation by asking a question. Perform an HTTP GET request on the following URL with the `ask` and `goal` query parameters: ``` GET https://www.bluegamma.io/documentation/market-data-guides/forward-curves/faqs.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is what the user is ultimately trying to achieve, the reason they need the answer. Sharing it helps GitBook give you a better, more relevant answer. A goal is most helpful when it describes the outcome the user wants rather than restating the question. For example, with `ask=how do I create an API token`, a goal like `automate deployments from our CI pipeline` lets GitBook tailor the answer to that use case. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.