Sentences with phrase «bonds and the cash rate»

The more pronounced movements in longer - term bond yields saw the spread between the yield on 10 - year bonds and the cash rate rise in net terms over recent months to around 65 basis points.

While the combination of rapid credit growth and below - average interest rates suggests that financial conditions remain expansionary, the slope of the yield curve, as measured by the spread between the yield on 10 - year bonds and the cash rate, suggests a somewhat different picture.

Not exact matches

As the business sector accumulates more surplus cash, it has the effect of driving down interest rates because there's less demand for corporate bonds and other forms of business lending.

Exchange - traded funds that track high - yield bond indexes have been the beneficiaries of a cash surge in recent weeks as market participants figure the central bank probably won't raise rates in 2015, and it could be well into 2016 before anything happens.

Tactical cash is extra cash you intentionally hold from time to time either because cash rates are so high that they're attractive, or because the prospects for bonds and equities are so negative that you'd rather withhold capital from those two asset classes for the time being.

Neither argument holds right now for holding any tactical cash, especially with no reasonable prospects for a near - term rate increase and the yield differential offered by bonds over cash right now.

As Russ Koesterich points out, cash typically produces lower returns than stocks or bonds, and once you invest for both inflation and taxes, average long - term rates are negative.

One is legitimate — every year in which short - term interest rates are expected to be zero instead of say, a typical 4 %, should reasonably warrant a 4 % valuation premium in stocks and bonds, over and above run - of - the - mill historical norms (one can demonstrate this using any discounted cash flow approach).

The effect of low interest rates is unimportant as long as the portfolio carries minimal cash and bond exposure.

Bond investors are scrambling to figure out whether interest rates have bottomed and where to deploy their cash.

This way, if a bear market occurs, you have a year of cash becoming available at the maturity date so that you do not have to sell stocks, and in a bull market you can buy new bonds as the ones you own mature, and you thereby benefit from the higher interest rates that high quality bonds give versus cash or CDs.

Moody's Investors Service, which downgraded Tesla's credit rating further into junk in March, still expects Tesla will need to raise about $ 2 billion selling equity, convertible bonds or debt, to offset the cash it burns this year and securities maturing through early 2019.

We could take the $ 16 billion we have in cash earning 1.5 % and invest it in 20 - year bonds earning 5 % and increase our current earnings a lot, but we're betting that we can find a good place to invest this cash and don't want to take the risk of principal loss of long - term bonds [if interest rates rise, the value of 20 - year bonds will decline].»

For example, if inflation and interest rates increase rapidly soon, it may be prudent to add more bonds to your portfolio or replace cash ballast with intermediate term bonds.

Interest rates have continued to be pushed lower and lower and lower and most of this is because the Fed keeps on adjusting that federal fund's rate and adjusting interest rates down in the way that they do that is by putting cash into the market and buying back bonds or short - term bonds with the federal fund's rate.

In exchange for a basket of 51 % global stocks, 26 % bonds, 13 % cash and 5 % each in commodities and real estate — much like a portfolio Mr. Salem oversees — the institutional trading desk at one major investment bank was willing to offer a guaranteed rate, after fees and inflation, of 1 %.

Highly rated companies that are financially strong and have massive amounts of cash on their balance sheets — think Microsoft, Exxon, etc. — can typically offer bonds with lower yields since investors are confident that the companies won't default (i.e., miss interest or principal payments).

In a well - diversified investment portfolio, highly - rated corporate bonds of short - term, mid-term and long - term maturity (when the principal loan amount is scheduled for repayment) can help investors accumulate money for retirement, save for a college education for children, or to establish a cash reserve for emergencies, vacations or for other expenses.

So, market participants who buy and sell bonds at different prices are expressing different views about a number of variables: the likelihood that these cash flows will be received (credit quality); the velocity at which they may be received (prepayment or extension); their relative value to other bonds; and their interest rates relative to prevailing rates.

You won't see a rise in the value of your holdings with cash during a recession and if you're keeping it in fixed term accounts then it will be adversely affected by rate rises, same as bonds.

Investors can indeed establish interest rates exposure via multiple instruments, such as interest rate swap, Treasury futures, or nominal (cash) Treasury notes and bonds.

An alternative, and perhaps more likely, interpretation is that the market expects that the target cash rate will remain below its average over recent years for some time, and this expectation is reflected in bond yields.

In April, BGC Partners» money broking joint venture in China, China Credit BGC, is granted product licenses approval by the People's Bank of China to offer interest rate swaps, bonds and interbank cash deposits products to Chinese and foreign banks in China.

These include cash deposits, certificates of deposit, fixed and floating rate cash bonds, commercial paper, short - term interest rate derivatives and illiquid assets across major currencies.

The spread between 10 - year bond yields and the cash rate is currently around 45 basis points, compared with more than 100 basis points on average over the past decade (see the chapter on «Assessment of Financial Conditions»).

The bonds generate a guaranteed rate of cash (low to medium levels) with low volatility and high liquidity, while real estate generates a high level of cash (potentially) with low levels of volatility and low liquidity.

Another indicator of financial conditions is the slope of the yield curve, as measured by the spread between the yield on 10 - year bonds and the target cash rate.

With the cash rate up by 50 basis points in late 2003 and yields on 10 - year bonds down a little over recent months, the spread has narrowed since early November to stand at around 50 basis points (Graph 67).

The simplest — and most drastic — action that an investor can take is to sell some of their current bond holdings and leave the proceeds in an interest bearing cash account or money - market fund which might benefit from a rise in interest rates.

Since governments tend to have AAA bond ratings - the risk is about as low as cash and so DJClayworth's answer comes into effect: Bob gives Sue cash to give to Mary.

Nassau Presiding Officer Richard Nicolello (R - New Hyde Park) said «we feel more comfortable with $ 23 million,» and noted that legislators wanted to meet Curran's concerns about «cash flow and potential rating issues if this bonding was not authorized.»

Much like homeowners who may refinance their mortgages and extract dollars to remodel the kitchen, school districts refinanced bonds, often securing lower interest rates, shortening the repayment term and taking out cash.

The way bonds work is that you pay a certain amount of money, say $ 50, and in 10 years you can cash it in for $ 100, so you have a guaranteed interest rate.

So, market participants who buy and sell bonds at different prices are expressing different views about a number of variables: the likelihood that these cash flows will be received (credit quality); the velocity at which they may be received (prepayment or extension); their relative value to other bonds; and their interest rates relative to prevailing rates.

They offer higher yields than interest bearing cash accounts while still offering some safety, since they mature within shorter time periods relative to other bond variants, and have prices that are less affected by interest rate fluctuations.

One is the ultra-low level of interest rates on GICs, bonds and other cash - equivalent investments, a phenomenon dubbed «financial repression» and perpetrated by central banks around the world.

The price of a fund's shares and the cash flows you receive will depend on the bond market's fluctuations — which are influenced by changes in interest rates — and, of course, the manager's skill.

Given that shorter duration bonds hold up better when interest rates rise and benefit from the increase faster, they make a great choice for investors looking to cash in on the Fed's decision.

They end up with 20 - 30 positions, some in short - term bonds and some in secured floating - rate loans (for example, a floating rate loan at LIBOR + 2.8 % to a distressed borrower secured by the borrower's substantial inventory of airplane spare parts), plus some cash.

One can try to look at the scenarios across the tranches, and see which tranches have cash flows that behave like bonds, equities, and warrants, and apply appropriate discount rates like 6 %, 20 %, and 40 % respectively.

And when bond investors think rates will increase, they tend to move to short - term bonds or cash.

Last year, as short - term rates ticked up slightly, XFR returned 1.90 %, significantly more than both short - term bonds and cash.

Over the next 12 months, cash flows from coupon payments and the sale of bonds are reinvested at the new higher rates.

It also currently holds a particularly large position in cash and short - term bonds, which undermines returns when interest rates are stable, but provides good protection when interest rates rise.

But if you decide you really don't like bonds and can get the rate of return you need with a mix of cash and stocks, that works too.

In a well - diversified investment portfolio, highly - rated corporate bonds of short - term, mid-term and long - term maturity (when the principal loan amount is scheduled for repayment) can help investors accumulate money for retirement, save for a college education for children, or to establish a cash reserve for emergencies, vacations or for other expenses.

As higher yields become available in safer vehicles like government bonds, CDs (although you have protection with Flex CDs), money markets, etc., and interest rates are perceived to continue upward, cash leaves high yield investments, driving the yields higher but sending the share price lower.

Second, it meant (and means) that investors are finally receiving at least a nominal rate of interest on their cash equivalents and short - term bond holdings going forward — a welcome change for patient value investors.

As Russ Koesterich points out, cash typically produces lower returns than stocks or bonds, and once you invest for both inflation and taxes, average long - term rates are negative.

You can get an idea of how long your savings might last given various mixes of stocks, bonds and cash, different withdrawal rates and varying lengths of time in retirement by going to this retirement income calculator.