Not exact matches
Some in the
market have attributed the sharp
market swings seen during the downturns in October and December as indicating structural problems with liquidity in the
market — and some fingers have been
pointed at the proliferation of
bond funds.
Since the
bond market's «flash crash» back in October — when US 10 - year Treasury yields fell 34 basis
points, or 0.34 % in one morning — concerns regarding liquidity and how resilient the
bond market might be to shocks have lingered around the
market.
In the
bond market, the 10 - year US Treasury yield fell less than 1 basis
point, to 2.79 %, near the key 3 % level that traders are closely watching.
And it also means that
bond market traders believe we're likely to see at least a quarter
point hike in interest rates by the middle of next year.
Powell's comment was
pointed to by
bond market strategists as a reason for a sudden pop in
bond yields.
Liew
pointed to China as a convergence play, noting it was the world's second - largest economy, with the third - largest
bond market.
Timmer: Yeah, so last August which was a key inflection
point for the
market — because at that
point, nobody was expecting tax cuts anymore and the 10 - year Treasury had fallen to 2 %, and the
bond market which of course is always pricing in the potential future, was pricing in only one more rate hike over the subsequent two years.
The issue of
bond market liquidity has been a consistent theme over the past years or so with financial executives such as JP Morgan CEO Jamie Dimon, Blackstone CEO Steve Schwarzman, and Oaktree Capital's Howard Marks weighing in on the issue and generally
pointing the finger at a lack of liquidity exasperating moves in financial
markets.
If the
market weakens and all
bonds are quoted 97.5 / 99.5, the NAV is 98.5, so only down 1 %, but in the real world, if you are a seller you are down at least 1.5
points (from 99 to 97.5).
Bonds due in 2018 and won by BofA were «aggressively» priced with a 1.64 percent yield that narrowed Illinois» spread over Municipal
Market Data's benchmark triple - A yield curve to 70 basis
points from 100 basis
points ahead of the sale, Greg Saulnier, a MMD analyst, said.
Another
point, perhaps, is that it's no worse for the Treasury to print a trillion - dollar gold coin than it is for the Federal Reserve to buy trillions in mortgage securities to save banks and the
bond market.
People are worried about
bond market liquidity, is the
point I'm trying to make here.
Which all goes back to my
point — since companies change in a lot of unpredictable ways, it makes more sense for passive income to just ride the
market by investing in a Total Domestic Stock Market, Total Bond Market, and Total International index funds, with allocations that depend on your goals and time ho
market by investing in a Total Domestic Stock
Market, Total Bond Market, and Total International index funds, with allocations that depend on your goals and time ho
Market, Total
Bond Market, and Total International index funds, with allocations that depend on your goals and time ho
Market, and Total International index funds, with allocations that depend on your goals and time horizon.
Peter Boockvar, chief
market analyst at The Lindsey Group,
points out that for a fourth month in a row, foreigners were net sellers of U.S. notes and
bonds, dumping $ 13.1 billion in July for a year - to - date total of $ 156 billion.
At this
point, we would require at least a strong rally in
bonds or a significant improvement in
market breadth, both which have stalled lately.
Analysts
pointed to a multiple reasons for the selloff in China's
bond market.
Gross
pointed to the long - term success of the Total Return Fund, while acknowledging the tough year the fund saw in 2011, when it experienced significant net outflows after he bet against the
bond market.
From this
point forward, even Ben Bernanke knows that aside from some extreme type of measure that the economic effects and the effects on equity
markets and
bond markets are going to be limited.
As long - term investments, many factors that roil the stock or even broader
bond markets don't affect high yield, the panelists
pointed out.
I have to admit that as I've gotten older that I've tried to simplify my investments to the
point that it's basically the Vanguard Total Stock
Market Fund and the Vanguard Total
Bond Market.
Long
bonds will end up being a very volatile investment at some
point once rates or inflation rise from current levels, but intermediate - term
bonds should continue to dampen stock
market volatility.
One of the challenges
pointed out by many is the fact that the 60/40 portfolio has been juiced over the past 30 + years by the seemingly never - ending
bond bull
market.
The emergence of green
bonds serves as a prime example of the evolving
market landscape and
points to a future where attractive financial returns and positive societal and environmental outcomes can happen simultaneously.
I've seen a big seller who needed to sell a big position in a junk
bond issue force the
market down 40
points in order find a level where buyers would step up.
There could be more pain in other sectors of the
bond market based on credit quality and maturity, but the
point is that
bonds were never meant to be long - term return enhancers for your portfolio.
Btw, for those who are skeptical of the
bond market, I'd
point out that they are usually alot better at it than stock pontificators.
At some
point in the next year, the Fed will taper off its
bond purchases, As it does that and as the
market anticipates that, we're likely to see some big swings in the stock
market.
The average
market impact cost was 29 basis
points (39 basis
points) per $ 1 million traded for investment - grade (high - yield) corporate
bonds.
In a diversified portfolio you use your
bonds to buy stocks (or for spending purposes if taking distributions from your portfolio) when the stock
market falls so you aren't forced to sell your stocks at a low
point in the cycle and lock in losses.
And they
point to the stock
market and the
bond market.
Bonds seem as yet unable to see what the fuss is all about, but at this
point it is important to ask ourselves whether the equity
market sell - off is going to bleed into the fixed income world anytime soon.
The one - day loss for many funds, including Vanguard Total
Bond Market, iShares Core U.S. Aggregate
Bond, Pimco Total Return and Metropolitan West Total Return, while less than a half a percentage
point, still amounted to more than 10 percent of their current yield.
While the size of the victory and Syriza's choice of coalition partner caused some angst — Greek
bond yields jumped around 60 basis
points immediately after results were announced — the damage to financial
markets was limited.
At this
point I want our investors to think about conservation of capital, I want them to think about being wary about these
markets, I want them to investigate less volatile places in the
market like higher - grade corporate
bonds.
U.S. high - yield
bond spreads are 34 basis
points, or hundredths of a percentage
point, tighter; cover spreads are 21 basis
points tighter, and emerging -
market credit excess returns are at 3.6 %.
In January 2018, Craig W. Johnson, who is director of Piper Jaffray's technical research group, told CNBC that yields on those
bonds were entering a «danger zone» while the
market was reaching an «inflection
point.»
At this
point, fixed income investors should no longer beware the 3 % psychological level, and since we are very far away from the 4 % level they should look for external threats to the
bond market.
While not exactly hitting the Federal Reserve's revered 2.0 % annual inflation target, it was apparently close enough to create more jitters in the
bond market, with the yield on the U.S. Treasury's benchmark 10 - year note immediately climbing seven basis
points to 2.91 %, its highest level in more than four years.
As we
pointed out in our post last week, a withdrawal rate strategy should respond to
market factors like equity valuations and
bond yields as well as personal factors like age, retirement horizon, and expectations about pension and Social Security benefits.
In terms, I think of inflation and
bond markets, it took six, seven, eight, maybe 10 years of high inflation in the 1970s before you had Paul Volcker brought in to say «enough is enough,» and then again whether it's led by American monetary policy but similar moves in Europe, obviously in the UK, a significant tightening of monetary policy because people got fed up with inflation and I don't think that we are kind of yet at the
point where real wages have been suppressed so much by that irritation that inflation is always running ahead, life is becoming more expensive, so we need the central bank radically to change their policy.
If the deflation deadlock is ever broken and yields are rising several 100 basis
points, the resulting mark - to -
market losses of
bond and swap portfolios could lead to systemic pressure.
An important issue in
bond markets at present is whether the recent tightening of 25
points by the US Federal Reserve marks the start of a more general uptrend in interest rates.
Reflecting these positive developments, the Japanese stock
market has risen by around 40 per cent over the past six months and long - term
bond yields have risen by nearly 1 percentage
point since the middle of the year.
On the other hand, Craig Johnson, chief
market technician at Piper Jaffray said: «I feel even stronger about our year - end call of 3, 3.25 [percent] in the 10 - year
bond yield at this
point.»
Banks are retrenching from lending to the
point that corporate borrowers are turning to the
bond market instead for funding.
Gross expects the Federal Reserve to lower interest rates by another three - quarters of a
point, increasing the odds of a modest economic recovery by year - end — and boosting the
bond market.
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The EFSF will now be able to loan the full amount allotted to the fund, it will be allowed to buy sovereign
bonds on the primary
market, and the interest rate on loans to Greece was cut by a percentage
point while the maturities of the loans were extended.
If that turns out to be true, we believe stock and
bond markets are more likely to experience volatility and «turning
points» as these
markets adjust to new policy imperatives, in which case, more active strategies that employ dynamic approaches to changing
market conditions will have the potential to outperform passive, long - only investment strategies.
Another
point is that there can be mark - ups in
bonds and thus it isn't necessarily that you are making more in trading
bonds assuming one is buying
bonds on the secondary
market that may not be as liquid as a mutual fund.