Indeed, world currency markets have roared back to life lately after years of hibernation, with a handful of monetary policy surprises — including the European Central Bank (ECB)'s bigger - than -
expected bond buying program and the Federal Reserve (Fed)'s delay in raising rates — leading to rising volatility, as the chart below shows.
Not exact matches
«People who are
buying long
bonds... there's going to be pain for people who are
expecting that rates are going to stay somewhat stable there,» Schechter said.
Indeed it is widely
expected that the ECB will expand its securities
buying program in size, duration and scope (the ECB has been exploring
buying municipal
bonds for example).
It started with the Swiss National Bank's (SNB) decision to unpeg its currency from the euro earlier this month, followed by a larger - than -
expected bond -
buying program from the European Central Bank (ECB) on January 22.
Many market participants are
expecting the European Central Bank (ECB) to launch a full - scale quantitative easing (QE) program in the next few months, whereby it would enter the market and
buy sovereign
bonds in large quantities.
nominal zero coupon
bonds trade below par because we
expect money to
buy less in the future than we do today.
With the Fed no longer
buying bonds and investors
expecting greater inflation, analysts say higher yields could make
bonds more attractive than stocks.
When interest rates rise, or are
expected to, stockbrokers urge conservative investors to
buy individual
bonds.
Gold suffered a sharp fall this week as better - than -
expected U.S. economic data raised the possibility that the Federal Reserve may start scaling back its $ 85 - billion - per - month
bond -
buying program earlier than anticipated.
FRANKFURT — The European Central Bank is widely
expected to announce on Thursday that it will finally begin
buying government
bonds as part of a so - called quantitative easing program.
I realize that if the private sector credit creation mechanism is not functioning properly, QE purchases can overwhelm the
expected supply response, but it is a mistake to assume that since the Federal Reserve is
buying bonds then longer - term yields must be artificially suppressed.
• Whom do they
expect to
buy the
bonds from?
-LRB-...) After years of unprecedented monetary stimulus propping up the world's financial markets, investors are now confronting the reality of an end to the Federal Reserve's
bond -
buying program, which, as
expected, the central bank reduced by another $ 10 billion on Wednesday.
Almost all assets people can
buy —
bonds, stocks or houses — are back in the 4 percent to 6 percent mode... «If people are
expecting 10 percent - plus returns, they're in trouble.»
If so, you
buy the longest noncallable
bonds, add keep
buying every dip, until rates reach your
expected nadir.
And perhaps more important, since no one is fooled by this ruse,
expect whatever benefits this plan delivers to be short - lived, How comfortable will investors be with
buying stock and
bonds of banks if they know the accounts are rubbish?
If someone
bought your $ 10,000
bond for $ 7,000 with, say, nine years to go to maturity, they'd
expect to be paid $ 500 per year in interest.
Gundlach says he's uncomfortable with the term «tapering» to describe the Fed's
expected approach to winding down its
bond -
buying program, saying it wrongly implies the central bank can achieve «perfection» in its effort to wind down quantitative easing.
If a
bond has a face value of $ 100, pays 1 % and matures in 20 years» time then you
expect to receive a total of $ 120 from
buying it now — $ 1 per year for 20 years and $ 100 at the end.
That means that, from here, all
bond investors can reasonably
expect to earn is the yield on the
bonds they
buy.
We
expect episodes of volatility during 2018, which should provide opportunities to
buy good corporate
bonds relatively cheaply.
Just as you would with any important purchase, such as a home or a car, checking out the current prices of comparable
bonds gives you a strong indicator of what your
bond will cost to
buy, or what you can
expect to receive if you are selling a security.
I
expect that we'll be inclined to increase our exposure in long - term
bonds on any substantial price weakness and upward yield pressure, but that inclination will be gradual and proportionate - I don't think it's useful to think of any particular level on say the 10 - year or the 30 - year Treasury as a «
buy.»
How do I calculate my
expected return if I
buy a municipal
bond at a premium with a sinking fund feature?
An investor
buying a
bond needs to know what return to
expect.
He has called his approach «
expected value analysis»: it is based on calculating the percentage likelihood of various outcomes and multiplying them by the current
bond price, after which he compares the
expected value with the current market price to determine whether he should
buy or sell.
If the issuer can
buy back their
bonds before the maturity date, this will affect any interest payments that you
expect to get over the life of the
bond.
For example, if you
buy a
bond that makes interest payments of $ 100 per year for 10 years, you can
expect to receive $ 100 per year.
After all, if the return on
bonds is low then domestic investors can be
expected to
buy stocks, pushing up their price.