Forecasting yield curves with regime switches is important in academia and financial industry. As the number of interest rate maturities increases, it poses difficulties in estimating parameters due to the curse of dimensionality. To deal with such a feature, factor models have been developed. However, the existing approaches are restrictive and largely based on the stationarity assumption of the factors. This inaccuracy creates non-ignorable financial risks, especially when the market is volatile. In this paper, a new methodology is proposed to adaptively forecast yield curves. Specifically, functional principal component analysis (FPCA) is used to extract factors capable of representing the features of yield curves. The local AR(1) model with time-dependent parameters is used to forecast each factor. Simulation and empirical studies reveal the superiority of this method over its natural competitor, the dynamic Nelson-Siegel (DNS) model. For the yield curves of the U.S. and China, the adaptive method provides more accurate 6- and 12-month ahead forecasts.

In the extra-thick coal seams and multi-layered hard roofs, the longwall hydraulic support yielding, coal face spalling, strong deformations of goaf-side entry, and severe ground pressure dynamic events typically occur at the longwall top coal caving longwall faces. Based on the Key strata theory an overburden caving model is proposed here to predict the multilayered hard strata behaviour. The proposed model together with the measured stress changes in coal seam and underground observations in Tongxin coal mine provides a new idea to analyse stress changes in coal and help to minimise rock bursts in the multi-layered hard rock ground. Using the proposed primary Key and the sub-Key strata units the model predicts the formation and instability of the overlying strata that leads to abrupt dynamic changes to the surrounding rock stress. The data obtained from the vertical stress monitoring in the 38 m wide coal pillar located adjacent to the longwall face indicates that the Key strata layers have a significant influence on ground behaviour. Sudden dynamically driven unloading of strata was caused by the first caving of the sub-Key strata while reloading of the vertical stress occurred when the goaf overhang of the sub-Key strata failed. Based on this findings several measures were recommended to minimise the undesirable dynamic occurrences including pre-split of the hard Key strata by blasting and using the energy consumption yielding reinforcement to support the damage prone gate road areas. Use of the numerical modelling simulations was suggested to improve the key theory accuracy.