It's not driven by valuations but simply a result of stocks being lower than my target because of a drop in stock prices and
a gain in bond prices.
Not exact matches
The debt issued Tuesday by the drugstore giant had
gained $ 320 million by Wednesday morning
in New York, according to Trace
bond price data compiled by Bloomberg.
Bond yields snapped higher, adding to their already steep
gains, and federal funds derivatives showed market expectations are moving closer to
pricing in a full three interest rate hikes by December.
In these cases, the difference between the
bond's issue
price (the discounted rate) and its face value would be considered tax - exempt income rather than capital
gains.
Also, ETFs such as the iShares Trust — iShares 20 + Year Treasury
Bond ETF (TLT B --RRB- have
gained from a
price level of about $ 119
in mid-September to as high as $ 126.21
in the beginning of October.
Other examples are the broad US stock market, the stocks of companies involved
in social media and / or e-commerce, the market for junk
bonds, and a group of junior mining stocks where just the hint of a possible discovery has led to spectacular
price gains and market capitalisations that bear no resemblance to current reality.
Throughout 2016, the topic that
gained momentum
in the corporate
bond market was the need for the buy - side to embrace
price making as a strategy.
Duration measures how sensitive a
bond's
price is to changes
in interest rates — higher duration
bonds experience bigger
gains and losses
in response to a change
in interest rates.
If you reinvested all
gains but failed to rebalance, the huge runup
in stock
prices over the past eight and a half years would have transformed your portfolio mix to nearly 90 % stocks and 10 %
bonds today.
Because the amount of market discount, two points, is less than the de minimis amount (which
in this case is 2.5 points, or 0.25 percent of the face value of a
bond times the number of years between the
bond's acquisition and its maturity), the market discount is considered to be zero and the difference between purchase
price and sales
price or redemption is generally treated as a capital
gain upon disposition or redemption.
Typically, the purchase and sale
price of a municipal
bond includes the dealer's markup; however
in cases where a commission is charged, it should be taken into account by the holder
in computing
gain or loss.
Thomas would save more
in taxes by using the TFSA to hold the corporate
bonds, which have a higher yield and limited potential for
price gains.
As yields rise,
bond prices have fallen erasing
gains seen earlier
in the year.
In one case the yield curve is steep and the bond is predicted to have a large capital gain before later falling in pric
In one case the yield curve is steep and the
bond is predicted to have a large capital
gain before later falling
in pric
in price.
Also, whereas stocks may drop like a rock
in a correction, the flight to safety can lift
bond prices and push down yields, upping the potential for capital
gains even if stocks turn sour.
As they came into the market,
bond yields fell and
bond prices, which move
in the opposite direction to yields, began to
gain ground, providing a nice capital
gain to holders.
For example, every percentage point
gain in yield, a 10 - year
bond would lose roughly 10 %
in price, meanwhile a 30 - year
bond would drop around 30 %.
Regardless of the type of
bonds that are sold, any debt issue that is traded
in the secondary market will post either a capital
gain or loss, depending on the
price at which the
bonds were bought and sold.
That said, I do not currently see enough value
in treasury
bond ownership nor am I inclined to seek
price gains that correspond to twice (200 %) the daily performance of the Barclays Capital U.S. 7 - 10 Year Treasury Index.
Tax - Free Capital
Gains When you invest
in an asset like a
bond or real estate, and sell it for a higher amount than the original purchase
price, that profit is called a capital
gain.