For bond investors with a short - term investment horizon, it is absolutely critical to think about rising interest rates.
It is important to be aware that a big jump in interest rates could be quite
painful for bond investors due to a combination of falling bond prices, inflation, and taxes.
Since bonds in general are sought after by risk - averse investors (because bonds contain less risk than stocks), IG bonds are typically a good fit
for bond investors in terms of risk appetite.
U.S. yields are somewhat higher — around 1.9 % for 10 - year Treasuries — but the big
question for bond investors right now is, how much higher they might go?
U.S. yields are somewhat higher — around 1.9 % for 10 - year Treasuries — but the big question
for bond investors right now is, how much higher they might go?
With bond returns declining, Charles Schwab's Kathy Jones laid out
ways for bond investors to protect their fixed - income...
In October, it partnered with BNY Mellon and HSBC, and in November it launched Algomi ALFA, a pre-trade fixed - income data - aggregation and market - surveillance
tool for bond investors.
Higher interest rates would mean big
losses for bond investors, and also for government - sponsored entities, such as Fannie Mae and Freddie Mac, that hold mortgage - backed assets.
DeMarco: Next year may be challenging
for bond investors if rates rise and inflation picks up as we expect.
Duration Risk: If interest rates do ever decide to rise, duration will be the most important
statistic for bond investors to pay attention to.
Despite the outflows, Price's net income rose nearly 19 percent in 2013, a year marked by strong U.S. stock performance and
difficulties for bond investors.
Recent increase in the yields of 10 - year US government bonds above 3 % (the annual interest paid) was psychologically a watershed
moment for bond investors.
That's quite a comedown from the 10 % for stocks and 5 % or
so for bonds investors had come to expect in past decades.
Returns of 1 % or less are not
impossible for bond investors and with both low interest rates and market fundamentals suggesting stocks will produce below - average returns, taking calculated risks now may be more important than ever.
We think that US market is a wonderful
place for bond investors and that the bull market could be over if we get over 3 % but we don't see rates moving up very high from that level for many years.
Let's dig into one of the most fundamental
concepts for bond investors to understand: the inverse relationship between bond prices and interest rates: when one goes up, the other goes down.
Baird Funds President, Mary Ellen Stanek, CFA, talked with Moneylife's Chuck Jaffe in an interview on rising interest rates and why this is a
positive for bond investors.