Domestic
bond market volatility also decreased last year with 10 - year Treasury yields trading in a tighter - than - normal range.
Not exact matches
But amid the optimism, some investors
also have an eye on potential causes for concern, including the end of the bull run for
bonds and persistent low
volatility in
markets.
Bond traders
also keep an eye on the VIX, a measure of stock -
market volatility, since it has historically been highly correlated to the performance of stocks: rising when stocks sell off and falling when stocks rally.
With
market volatility hitting multi-decade lows, junk
bond yields
also at record lows, the median price / revenue ratio of S&P 500 constituents at a record high well - beyond 2000 levels, and the most strenuously overvalued, overbought, overbullish syndromes we define, I'm increasingly concerned about the potential for an abrupt «air pocket» in the prices of risky assets that could attend even a modest upward shift in risk premiums.
Similarly, measures of
bond market volatility are
also benign.
* Municipal
bonds can
also help insulate your portfolio against
market volatility, and tend to have lower default risk than corporate
bonds.
Including a core
bond fund in your investment mix may reduce your portfolio's overall
volatility — and can
also help moderate your natural anxiety during stock
market downturns.
We
also see
bond market volatility heading higher.
These factors may
also lead to increased
volatility and reduced liquidity in the
bond markets.
We
also compared the five - year annualized
volatilities of the S&P Pan Asia
Bond Index (denominated in USD) with other major bond markets, such as the U.S. treasury, U.S. investment grade corporate, U.S. high yield corporate, Eurozone sovereign and Australian bond markets, see the exhibit be
Bond Index (denominated in USD) with other major
bond markets, such as the U.S. treasury, U.S. investment grade corporate, U.S. high yield corporate, Eurozone sovereign and Australian bond markets, see the exhibit be
bond markets, such as the U.S. treasury, U.S. investment grade corporate, U.S. high yield corporate, Eurozone sovereign and Australian
bond markets, see the exhibit be
bond markets, see the exhibit below.
Including a core
bond fund in your investment mix may reduce your portfolio's overall
volatility — and can
also help moderate your natural anxiety during stock
market downturns.
The Moderate Countercyclical portfolio is designed for the investor who can stomach fairly large drawdowns, but is looking for less
volatility than stocks while
also trying to generate better returns than a static 60/40 portfolio which is virtually guaranteed to expose you to low
bond returns and high stock
market risk in the coming 20 years.
This category is
also home to portfolios that attempt to minimize
volatility by maintaining short or ultra-short duration portfolios, but explicitly court significant credit and foreign
bond market risk in order to generate high returns.
* Municipal
bonds can
also help insulate your portfolio against
market volatility, and tend to have lower default risk than corporate
bonds.
The recent
bond market volatility already prompted Fannie Mae to revise its outlook for mortgage rates, while housing experts are
also concerned about how recent tax reform legislation will affect home prices.
Bonds are sometimes
also used by sophisticated investors during times of stock
market volatility to preserve the capital values of their investments.