Glossary
The words that turn up in financial headlines, defined one at a time.
Term premium
Term premium is the extra return investors may demand for locking money into a longer-term bond instead of repeatedly using shorter-term bonds. It tends to rise when investors see more uncertainty around future inflation, interest rates, or government borrowing.
Crack spread
A crack spread is the price difference between a barrel of crude oil and the refined products — like gasoline or diesel — made from it. If a refinery buys crude oil for $80 and sells the resulting fuels for $110, the crack spread is $30. This margin shows how profitable it is for refineries to turn raw oil into usable fuel.
Short covering
Short covering happens when traders who bet on a price falling buy the asset back to close that bet. If many traders do this at once, their buying can push the price higher.